Automotive Industry Investment Value Rises, Japan Still the Largest

KatadataOTO – The government, through the Ministry of Investment and Downstreaming/Investment Coordinating Board (BKPM), claims that in the last five years there has been an increase in investment in the automotive industry. Significantly, the agency mentioned that as of September 2024, the value reached Rp 31.7 trillion.

That amount is up 43 percent compared to 2019, which was only Rp 11.04 trillion. If broken down, the investment value consists of foreign direct investment (PMA) of Rp 28.15 trillion and domestic direct investment (PMDN) of Rp 3.6 trillion.

“Then if broken down further, there will be three industries, namely batteries at 15 percent, four-wheeled vehicles at 73 percent, and two-wheelers at 11 percent,” said Dendy Apriandi, Director of Investment Deregulation at BKPM, as reported by Antara (14/01).

Japan is still the largest investor in the national automotive sector. The country has disbursed funds amounting to Rp 75 trillion in the period from 2019 to 2024.

Photo : KatadataOTO

Meanwhile, South Korea is the second-largest investor with a value of Rp 44.25 trillion, followed by Singapore at Rp 5.5 trillion, Hong Kong at Rp 3.69 trillion, and China at Rp 1.04 trillion.

The most investment flowed into the car industry with a value of Rp 107 trillion. This was followed by two and three-wheeled vehicles at Rp 16.7 trillion and batteries at Rp 22.1 trillion.

The large amount of investment entering Indonesia's automotive industry is claimed to be the result of a strategy from the Ministry of Investment and Downstreaming/BKPM. This includes providing vocational education programs to equip skills according to market conditions, investment incentives, especially for the electric vehicle sector, and regulatory improvements.

Photo : Carscoops

Not only that, the government has also offered tax holiday facilities, tax allowances, and import duty exemptions for investment in the electric vehicle industry.

In addition, the existence of Presidential Regulation (Perpres) No. 79 of 2023 also makes it easier for investors to enter the country. It regulates the provision of incentives in the form of 0 percent import duty, 0 percent luxury goods sales tax (PPnBM) for imports of completely built-up (CBU) and completely knocked-down (CKD) battery-based electric motorized vehicles (KBLBB) with a certain Domestic Component Level (TKDN).