EV localisation lags as import incentives outpace domestic assembly rules
Otomotif Katadata, 5 Jan '26
Despite efforts to regulate electric vehicle adoption, current Domestic Component Level (TKDN) regulations in Indonesia are considered insufficiently stringent, with several manufacturers reportedly yet to utilise local component suppliers.
In 2026, manufacturers receiving Electric Vehicle (EV) import incentives will be required to conduct local assembly in proportion to the number of units imported.
The Association of Motorcycle and Automotive Equipment Industries (GIAMM) has stated that regulations governing local assembly remain inadequate, noting that the completely knocked down (CKD) procedure accounts for only 30% of the Domestic Content (TKDN), while the minimum requirement for each manufacturer is 40%.
Consequently, manufacturers benefiting from incentives for imported electric vehicles have not achieved the intended level of localisation. GIAMM has urged the government to address this policy to support the domestic component industry.
Over the past three consecutive years, the components industry has experienced multiple challenges and declines, according to GIAMM.
"For electric vehicles, the government is also requiring localisation, utilising the existing domestic parts and components industry," stated Rachmat Basuki, Secretary General of GIAMM, on 30th December.
Rachmat further noted that several manufacturers required to undertake local assembly in 2026 have not yet used domestic components. The incentive policy is intended to revitalise the components industry in 2026, following declines caused by import surges.
"Domestic-assembled electric vehicles have not yet undergone localisation," Rachmat emphasised.
List of brands receiving imported EV incentives
The first manufacturer to benefit from imported electric vehicle incentives was BYD. The subsidies have kept BYD EVs competitively priced, despite being Completely Built Up (CBU) units.
Citroen is another recipient, importing a number of Citroen e-C3 electric vehicles in their entirety before assembling them locally at the Indomobil Group's National Assemblers facility.
Following BYD and Citroen, additional Chinese brands, including GAC, Geely, and Xpeng, as well as Vietnamese manufacturer VinFast, have received incentives.
All of these manufacturers are required to commence local assembly of their vehicle lines in Indonesia in 2026, corresponding to the imported units distributed to consumers under the incentive programme.
