Minister of Industry Calls Automotive Incentives in 2026 a Necessity

KatadataOTO – The Minister of Industry (Menperin) has confirmed that automotive incentives for next year are under discussion.

The Ministry of Industry revealed that the automotive industry still needs assistance such as subsidies.

“We are currently drafting it. Automotive incentives are, in my opinion, a necessity, because it is too important of a sector,” said Agus Gumiwang Kartasasmita, Minister of Industry at ICE BSD, Tangerang, on Wednesday (26/11).

He further emphasized that the strategy for providing incentives must consider all factors from upstream to downstream.

Photo: Special

However, the Minister of Industry was still reluctant to explain in detail the types or schemes of incentives that will be disbursed to the automotive industry.

For context, previously there were PPnBM (Luxury Goods Sales Tax) incentives given for a range of vehicles that met the requirements, namely Low Cost Green Car (LCGC).

During the Covid-19 pandemic, the subsidy proved to help boost sales figures and revive public purchasing power.

“So, the government should indeed also prepare incentives for the automotive sector in 2026,” emphasized the Minister of Industry.

Previously, the Ministry of Industry had confirmed that a policy is being formulated to provide assistance to automotive manufacturers.

Once completed, it will then be submitted to the Coordinating Ministry for Economic Affairs (Kemenko Perekonomian).

The hope is that this series of incentives or subsidies can become part of the 2026 fiscal policy package and once again boost sales figures in the automotive sector.

The automotive industry is a key focus for the government because it can absorb a large workforce. Providing incentives can also have an impact on protecting the workforce from layoffs or termination of employment (PHK).

For your information, the automotive sector is one of the contributors to manufacturing Gross Domestic Product (GDP), exports, and labor absorption.

Photo: Special

Its investment is estimated to have reached IDR 174 trillion, with a total direct labor absorption in the four-wheeled, two-wheeled, and three-wheeled vehicle industries cumulatively reaching nearly 100,000 people.

The proposed 2026 automotive incentives, according to the Minister of Industry, also consider the transition of existing policies, such as for vehicle electrification.

This year, an example of an ongoing incentive is the subsidy for Completely Knocked Down (CKD) electric cars and imports with a commitment to local assembly in 2026.