Jakarta — Indonesia’s repeated delays in rolling out incentives for electric vehicle purchases are undermining consumer confidence, weakening investment sentiment, and slowing the country’s energy transition, the Institute for Essential Services Reform (IESR) said on Thursday, June 25.
The government recently postponed the implementation of incentives for electric motorcycle purchases for another month, despite earlier indications that the scheme would begin in July. Coordinating Minister for Economic Affairs Airlangga Hartarto said on Tuesday that the incentive scheme remains under review.
This marks the second delay, IESR said. The first postponement was announced by Finance Minister Purbaya Yudhi Sadewa, who cited similar reasons.
IESR said the repeated delays send a troubling signal about policy governance under Presidential Regulation No. 79/2023 on accelerating battery electric vehicle adoption in Indonesia. The repeated postponements indicate a lack of policy certainty at a time when Indonesia needs stronger momentum to accelerate electric vehicle adoption, IESR said.
The think tank warned that the absence of purchase incentives has already significantly affected electric vehicle sales, particularly electric motorcycles.
After sales incentives ended in late 2024, electric motorcycle sales dropped by 80 per cent in the first quarter of 2025 compared with the same period a year earlier, according to IESR data. The decline suggests that removing incentives has sharply reduced consumer demand and slowed adoption rates.
IESR also warned that policy uncertainty could weaken investor confidence in Indonesia’s EV ecosystem, potentially affecting long-term economic growth.
Unlike Indonesia’s biofuel program, such as B50, which has explicit targets and clearly assigned institutional responsibilities, the EV program lacks measurable adoption targets and clear inter-agency accountability, IESR said.
To address this, IESR urged the government to take two immediate actions.
First, the government should issue electric vehicle incentives without further delay. The Coordinating Ministry for Economic Affairs and the Finance Ministry should design incentives based on vehicle performance metrics such as driving range, battery capacity, and energy efficiency.
Second, President Prabowo Subianto should establish measurable national EV adoption targets with phased milestones, regular evaluations, and clear mandates for relevant ministries.
According to IESR, setting clear national targets would send a strong signal to the market, accelerate the development of Indonesia’s EV ecosystem, and ensure the implementation of Presidential Regulation No. 79/2023 is consistent, measurable, and accountable.
Without immediate policy clarity, IESR warned, Indonesia risks losing momentum in one of the most strategic sectors for its energy transition and industrial competitiveness. (nsh)
Banner photo: Electric vehicles on display, 2023. tanahair.net/nsh
