As vehicle sales and investment priorities face pressure, the status of automotive incentives remains unresolved following inter-ministerial discussions in Indonesia.

The Ministry of Industry has not confirmed the availability of automotive incentives for the year. Setia Diarta, director general of the metal, machinery, transportation equipment, and electronics industry, stated that the incentive proposal has been submitted to the Ministry of Finance.

He further added that the minister has also sent a letter to the Ministry of Finance regarding automotive industry sales, speaking at JIExpo Kemayoran, Jakarta, on February 5th, 2026.

Previously, Minister of Industry Agus Gumiwang Kartasasmita sent a letter outlining the proposal for automotive incentives to Finance Minister Purbaya Yudhi Sadewa in late December 2025. The proposed incentives relate to the luxury goods sales tax (PPnBM) and value added tax (VAT).

Setia stated that tax incentives for low cost green cars (LCGCs) will continue until 2031, while incentives for vehicles not classified as low-priced remain undecided. He said that the matter is still under discussion.

Coordinating minister for the economy Airlangga Hartarto stated that automotive incentives, particularly those related to electric vehicles, will not be continued. The government had disbursed a total of IDR 7 trillion (US$ 413 million) in incentives by 2025.

Airlangga stated that several brands, including Build Your Dreams (BYD), VinFast, and Hyundai, have invested in manufacturing facilities in Indonesia. He added that these investments would be directed towards the development of national car programmes in the future, speaking on January 14th, 2026.

The proposal for automotive incentives also considers an anticipated decline in car sales in 2025. Wholesale vehicle sales declined by 7.2% compared with 2024, while retail sales to consumers fell by 6.3% year-on-year.