The government intends to implement highly favorable policies to attract more investors to electric vehicles (EVs).
These policies include increasing subsidies for EVs and relaxing the requirement for a 40 percent Domestic Component Level (DCL) that was initially scheduled for 2023 but is now postponed to 2026.
According to Dr. Fahmy Radhi, a lecturer and energy economics observer at UGM, both of these policies indicate that the government appears to be more inclined towards meeting the demands of EV investors.
The direction of these policies also suggests that the government will continue to position Indonesia merely as a market for EVs rather than a producer.
“Both of these policies indicate that the government seems to be focusing only on the end product of EVs, neglecting the development of the entire industry ecosystem from upstream to downstream,” he stated on Tuesday (August 22).
Dr. Radhi believes the government should consistently develop the industry ecosystem through a research commercialization program.
In his view, the government has already initiated commercialization by banning the export of nickel ore and implementing smelting to produce various derivative products, including raw materials for battery production, a key component of EVs.
If the EV industry ecosystem is properly established, the government won’t need to offer incentives recklessly. EV investors will undoubtedly come to Indonesia due to its supply chain of various components needed by the EV industry.
“To prevent Indonesia from being merely a market for EVs, the government should set requirements for EV investors, including having manufacturing plants in Indonesia, a minimum DCL of 85 percent, and a commitment to transferring technology to Indonesian human resources,” he explained.
Dr. Radhi’s perspective is that if the government’s policies always seem weak in the face of foreign investors, each policy is likely to favor investors as producers rather than benefiting the people as consumers of EVs.
The negative experience of conventional vehicle industry development is evidence of this. Based on this history, Indonesia might continue to be positioned as just a market.
“Surely, this will repeat itself, and ultimately, the opportunity to make EVs a domestic product will disappear,” he emphasized.
Author: Agung Nugroho