The 14th GAIKINDO INTERNATIONAL AUTOMOTIVE CONFERENCE

CONTRIBUTION OF THE
AUTOMOTIVE INDUSTRY
ON NATIONAL INCOME
GROWTH

SRI MULYANI INDRAWATI

Minister of Finance
Republic of Indonesia

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JAKARTA | 24 JULY 2019
PRESENTATION OUTLINE

Indonesia Current Updates

Indonesia Automotive Industry

Global &
Domestic
Challenges in
Government Fiscal Policies
2019

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Indonesia Current
Updates
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FOR INDONESIA, 2018 HAS BEEN A REMARKABLY RESILIENT YEARS
Indonesia Economic Growth 2015-2018(%)
5.60%

5.07% 5,17
5.00% 5.03%
4.79%

2013 2014 2015 2016 2017 2018

Indonesia Inflation Rate 2014-2018 (%)

8.22%

Dec 2018
3.13%

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SOCIO-ECONOMIC INDICATORS IS IMPROVING
Gini Ratio Poverty Level (%) Unemployment Level (%)

0.42 20 12
0.410 16.58 10 9.75
0.4 15
8
0.38
0.376 0.382 10 6 5.01
0.36
9.41 4
5
2
0.34
2016 0 0
2007
2008
2009
2010
2011
2012
2013
2014
2015

2017
2018
2007 2009 2011 2013 2015 2017 2007 2009 2011 2013 2015 2017 2019

Gini ratio target 2019 Poverty Target 2019 Unemployment Target 2019
0.38 – 0.39 8.5% - 9.5% 4.8% - 5.2%

Challenges
HDI : 71.98
Challenges
- Access to food, health, and education for Challenges
- Disparity in access to capital
poor people
- Geographical condition - Economic changes structure of
- Climate change food price employment
- Skill mismatch
- 4th Industrial Revolution (automation,
artificial intelligence)
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STATE BUDGET
S1 2019 EXPENDITURE
REVENUE 9,6%
1034.5 GROWTH
898.8 7,8%
GROWTH
CENTRAL GOVERNMENT

TAX REVENUE
DEFICIT
630.6 12,9%
GROWTH

688.9 5,4%
GROWTH
-135.8 (-0.84%) TRANSFER TO REGION &
VILLAGE FUND

NON TAX REVENUE 4.8%

PRIMARY BALLANCE 403.9 GROWTH
209.1 18,2%
GROWTH -1.0 STATE FINANCING

GRANT 175.3
0.7 76.5 %
GROWTH 6
PREDICTED GLOBAL CHALLENGES IN 2019
No Deal
Brexit

China economic Rapid Tech

U.S. Monetary rebalancing Changes
Policy Geopolitical
Normalization Tensions

Protectionism &
Trade War
Climate
Change
Fluctuation in
Commodity Process
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Indonesia Automotive
Industry
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MAKING INDONESIA 4.0
To increase local production in terms of:

1. volume and

2. efficiency in the production of important raw

materials and components through
technology adoption and infrastructure
development, such as the construction of
integrated industrial zones and more efficient
logistics platforms.

3. Cooperating with world OEM companies to

increase exports, with a focus on multi-
purpose vehicles (MPV), environmentally
friendly low-cost vehicles, and sport utility
vehicles (SUVs).

4. Building an ecosystem for the EV industry,

starting with the ability to manufacture
electric motorbikes, later developing the
ability of electric cars based on EV adoption
that is inevitable in the future

Source:MoIndustry
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INDONESIA 2045
POPULATION ECONOMY STRUCTURE

High Value-added Sector

319 million
5th Biggest
Economy in the
World

PRODUCTIVITY MIDDLE INCOME BUSINESS

Productive
Age 47 % 70 %
Middle
Class
73 %
Service Sector

URBAN PER CAPITA

Income per Capita

73 % Live in Cities US$23.199 Source: Bappenas,

MoF

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EXPORT-IMPORT PERFORMANCE
Completely Built Up (CBU) Completely Knock Down (CKD) Component Parts
Million unit Million unit Million unit

Export Import Import

Export Import Export

4-Wheeled Export Import

(million USD)

Export
Import

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Government Fiscal
Policies
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BACKGROUND
Fuel Consumption for Road Transportation
50 41
38 39 39 40

MILLION KILOLITRE
40 35
28 30 33
30 25 26
• Government commitment to reduce 29% of 20
greenhouse gas emissions by 2030 at COP21 Average
10 5%/year
• The growth of motor vehicles averaged 11.5% -
per year in the last 10 years 2006 2008 2010 2012 2014 2016
• The consumption of fuel for land
transportation also continues to increase by 5%
per year where most of the fuel used is Vehicle Growth
imported fuel 150 114 121 129
86 94 104
100 67 77
55 62 Average
MILLION

43 11,5%/year
50

-
2006 2008 2010 2012 2014 2016
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Cource : BPS
Government Regulation on Sales Tax on Luxury Goods
Presidential Decree on Battery Electric Vehicles
Sales Tax on Luxury Goods
Legal Base VAT and Sales tax on luxury goods law, Government
Regulation no. 41 2013
Coverage Passenger car, Low cost and energy vehicle (KBH2), HybridEV,
Plug in HEV, Flexy Engine, Fuell Cell EV, Electric Vehicle
to further encourage the use of motorized vehicles that
Background are energy efficient and environmentally friendly
The rates are based on emissions and fuel efficiency
Fiscal arrangement
Incentive for : KBH2, Hybrid EV, Plug in HEV, Flexy
Engine, Electric Vehicle
Battery Electric Vehicles
Constitution 1945, Custom Law, Energy Law, Transportation,
Electricity Law, Enviromental Protection and Management Law,
Industrail Law
battery electric vehicle
to increase energy efficiency, energy security, and energy conservation in
the transportation sector, and the realization of clean energy, clean and
environmentally friendly air quality, and Indonesia's commitment to
reduce greenhouse gas emissions, it needs to accelerate the battery
electric vehicle program to road transportation
Fiscal incentives:
a. Import duty incentives on the import of battery-based electric vehicles (battery
electric vehicle / BEV);
b. Sales tax incentives on luxury goods;
c. Tax exemption / reduction incentives;
d. Import duty incentives on the importation of machinery, goods and materials
in the framework of investment;
e. Suspension of import duty in the context of exports;
f. Incentives borne by the government for the import of raw materials and / or
auxiliary materials used in the framework of the production process;
g. Incentives for making SPLU equipment;
h. Working capital credit assistance for financing the procurement of battery
swaps;
i. Export financing incentives; and
j. Other fiscal incentives.
SALES TAX ON LUXURY GOODS
Current Regulation New Regulation

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FISCAL INCENTIVES
Various tax facilities (including R & D facilities) will be integrated with export financing facilities, provision of
infrastructure (including the construction of electric charging stations), and support from the Regional
Government to develop battery electric vehicles in Indonesia
Import Duties Tax holiday Tax Allowance Tax Sales on Capital Investment
01 importation of electric 02 tax holiday facilities
03 Tax Allowance can 04 Luxury Goods
05 Import duty
motorized vehicles in the be provided for Electric motorized facilities are given
for the electric
Incomplete Knock Down parts, vehicle vehicles do not for the importation
motor vehicle
(IKD) and Completely Knock accessories and become this tax of machinery,
industry integrated
Down (CKD) will be given other motorized objects. The policy goods and
with batteries and
within a certain period of vehicle for motorized materials
electric motors
time as an effort to components vehicles is directed
encourage the growth of the industry reducing CO2
domestic industry and emissions which
increase local content. will be subject to
lower taxrates
Government borne
06 Export Facilities 08 Other Facilities
Import Duty
For 2019, the electric
07 Ease of Import for
• Incentive for charging station equipment production
• Fiscal incentives for research, development and technological innovation activities as well as
vehicles sector gets Export Purposes industrial vocations of battery-based components
government-borne import and export • Parking rates at locations determined by the Regional Government
duty facilities for raw and financing facilities • Relief of electricity charging fees at charging station
/ or auxiliary materials • Funding support for charging station infrastructure development
used for production • Professional competency certification for battery-based, and electric vehicle industry human
resources
• Product certification and / or technical standards for battery-based electric vehicle industrial
companies and battery-based component industries
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 THANK YOU

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