The Indonesian Government has, in the recent national industrialisation policy, prioritised
nine industry sectors for targeted development. The automotive industry is one of these
sectors.
Businesses can receive various incentives from the government to encourage their
expansion in certain areas. Incentives include tax benefits for businesses operating in
remote areas; developing infrastructure; transferring technology to domestic businesses;
and establishing research and development facilities. Incentives exist which guarantee a
corporate tax holiday for five to ten years for companies operating in pioneer industries.
The Indonesian Government passed its first Low Cost Green Car program in 2012 in an
effort to boast car sales in the country. The program provides luxury tax relief from
vehicles that meet the required criteria. To qualify for the program, a car must have a
cylinder capacity of between 980 cc and 1,200 cc for spark ignition (SI) engines; the
capacity of compression ignition (CI or diesel) engines must not exceed 1,500 cc. Both
gasoline and diesel types must have a fuel consumption rate of at least 20km/l.
The sale price of LCGCs also must not exceed IDR 95million (around US$7,800) and
the engines must use RON92 gasoline (for SI engines) or CN51 diesel (for CI engines)