Indonesia (hereinafter referred to as Indonesia), located in southeastern Asia, is the world’s largest island nation, with a land area of 1,914,000 square kilometers and a maritime area of 3,166,000 square kilometers (excluding the exclusive economic zone).
Indonesia has more than 300 ethnic groupsand over 200 national languages, the official language is Bahasa Indonesia, and about 87% of the people practice Islam, the largest Muslim population in the world.
Indonesia is the fourth most populous country in the world, with a population of approximately 290 million as of 2025, and a total of 38 first-level administrative regions (provinces).
Indonesia is rich in natural resources, known as the “Tropical Treasure Island”, and is rich in agricultural and forestry products such as palm oil and rubber, as well as petroleum, natural gas, and mineral resources such as coal, tin, alumina, soil, nickel, copper, gold and silver.
1.Overview of the Indonesian economy
In 2023, Indonesia GDP is $137 billion; GDP per capita is $4,940.According to data published by the World Bank, the shares of agriculture, industry and services in Indonesia’s GDP are 12.53%, 40.22% and 42.88%, respectively.
Indonesia’ s total foreign trade amounted to US$480.7 billion, of which total imports amounted to about US$221.9 billion, a year-on-year decline of 6.55 percent, and total exports amounted to about US$258.8 billion, a year-on-year decline of 11.3 percent.
Indonesia’s characteristic industries include oil and gas industry, mining industry, tourism, etc. The government announced oil reserves of 9.7 billion barrels, equivalent to 1.31 billion tons.Indonesia is rich in tourism resources, with a total of 11.68 million foreign tourists in 2023, an increase of 98.3% year-on-year.
2.Automotive Market in Indonesia
Automobile is one of the pillar industries of Indonesia, and currently the country is the largest auto consumer in Southeast Asia.Currently, there are more than 20 automobile companies in Indonesia, and the annual production of automobiles reaches about 1.4 million units, which is the second largest automobile producer in Southeast Asia.A total of 864,614 vehicles were sold in the year 2024.
3. Current Situation of New Energy Vehicle Industry in Indonesia
Indonesia sold 37,302 units of pure electric vehicles (EVs) in January-November 2024, with a market share of 4.7%. for the full years of 2022 and 2023, Indonesia sold 7,923 and 13,916 units of pure electric vehicles, respectively. in 2024 , pure electric vehicle sales were close to triple the 2023 figure.The highest selling brand is SAIC-GM-Wuling, with BYD’s entry into Indonesia in 2024 boosting sales to over 2,000 units per month.
Government Objective:
·6,318 electric vehicle charging stations and 10,000 battery replacement stations by 2025.
·2030, push 2 million electric vehicles on the road.
·Become a major player in the global battery supply chain by producing 140GWh of electric vehicle batteries per year by 2030.
Government tax incentives:
·Tax breaks: In an effort to attract foreign direct investment and promote the development of the electric vehicle industry, the Indonesian government has offered tax breaks to a number of electric vehicle manufacturers, including Chinese automakers BYD and GAC EAN.These companies will enjoy a preferential tax rate of 15 percent exemption from import tax and luxury sales tax if they commit to establishing factories in Indonesia.This policy comes into effect at the beginning of 2025.
·Production subsidies and sales tax reductions: In order to encourage the production and sale of electric vehicles, production subsidies are provided to electric vehicles with a certain percentage of domestically produced parts and components, and their sales tax is reduced.For example, the sales tax was reduced from 11% to 1%.
·Purchase subsidies: Provide high subsidies to EV buyers to narrow the price difference between EVs and conventional fuel vehicles, thus boosting EV sales.
4.Risk Tips for Indonesia’s Automotive Overseas Market
1、Complicated business procedures
The process of opening a company in Indonesia has many steps, involves multiple government agencies and takes a long time.At the same time, companies face a complex tax system with 51 different taxes per year.
2.Insufficient foreign exchange reserves
Indonesia’s foreign exchange reserves are not sufficient, the shortage of funds, many large-scale projects require capital contracting, or the use of concessional loans provided by foreign parties.
3.The cost of buying a car is too high
Indonesia’s automotive market is sensitive to financing costs, relying on loans for about 80% of purchases, and the relatively high interest rates on loans among ASEAN countries negatively impacts car sales.
Source of the article: Beltway Gaoxin’s Automobile Going Overseas
