ndustry players have welcomed plans to reinstate purchasing subsidies for electric two-wheelers as the government looks to reduce reliance on imported fossil fuels that have become increasingly costly amid ongoing tension in the Middle East.
Indonesian Electric Motorcycle Industry Association (Aismoli) chairman Budi Setiadi said the plan came at the right moment.
Not only could the policy help “reduce pollution and emissions”, but it would also save budget spending on fuel subsidies, Budi told The Jakarta Post on April 27.
The US-Israeli war against Iran has sent global oil prices up sharply, forcing the government to fork out more to keep pump prices of subsidized fuels unchanged for consumers.
Large volumes of diesel and gasoline are sold at fixed prices that are typically far lower than global prices, with the state covering the difference through energy subsidies and compensation for state-owned companies Pertamina and PLN.
“If the number of vehicles keeps growing, so does the subsidy [bill for the government]” Budi noted, but subsidies for electric vehicle (EV) purchases could help cut subsidy spending “in the short-term”.
Every Monday
The 2026 budget plan is based on an assumed global oil price averaging US$70 per barrel and a rupiah exchange rate averaging around Rp 16,700 per US dollar, but with oil currently above $100 and the rupiah below Rp 17,000, the fiscal calculation is under severe strain.
