he Home Ministry has walked back a new regulation scrapping tax exemptions for electric vehicles after a backlash, with critics saying it had undermined the country’s push for EV adoption over the past few years.
The ministry issued earlier this month Home Ministry Regulation (Permendagri) No. 11/2026 on motor vehicle tax, mandating EVs as taxable regional assets, and therefore, a subject for local taxation.
The regulation was welcomed by regional heads including West Java Governor Dedi Mulyadi and Jakarta Governor Pramono Anung, saying that they would implement the taxation immediately. Amid greatly reduced central government transfers to regions, local administrations have been scrambling to create new sources of income, including by levying new local taxes.
Car manufacturers and consumers, along with economists, have been puzzled by the sudden emergence of the regulation, describing it as inconsistent with the national program that started under former president Joko “Jokowi” Widodo to push the energy transition and support the growth of an EV battery industry in Indonesia.
As the controversy grew, Home Minister Tito Karnavian issued a circular signed on Wednesday in which he called on regional administrations to provide fiscal incentives in the forms of “exemptions” for EV taxes, citing global economic pressures, volatile oil and gas prices that also affected the country’s economy and the need to support renewable energy adoption.
“Governors [are instructed] to report the fiscal incentives as proven by governor decrees [stipulating the incentives] by May 31, 2026,” the circular said in a copy received by The Jakarta Post.
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