Indonesia's Rp5 million electric motorcycle incentive pending Finance Ministry regulation

Indonesia's Rp5 million electric motorcycle incentive pending Finance Ministry regulation

Indonesia's planned Rp5 million incentive for electric motorcycles remains on hold as authorities await a crucial Finance Ministry regulation needed to launch the program, Industry Minister Agus Gumiwang Kartasasmita announced Monday.

Speaking to reporters at the Presidential Palace complex in Jakarta, Agus said his ministry stands ready to implement the incentive scheme but cannot proceed without the formal regulation, known as a PMK. The Industry Ministry has completed its technical preparations for the program, which aims to accelerate electric vehicle adoption in the world's third-largest two-wheeler market, where more than 130 million motorcycles are currently in circulation.

The timing of the incentive launch depends entirely on the Finance Ministry, Agus explained, adding that he could not set a target date for implementation. Once the PMK is issued, the Industry Ministry will make necessary adjustments to begin rolling out the program.

Brand eligibility discussions underway

Government agencies are continuing deliberations on which electric motorcycle brands will qualify for the incentive. The Industry Ministry, state investment agency Danantara Indonesia, and the Finance Ministry are jointly reviewing eligibility criteria. Danantara, established in February 2025 as Indonesia's second sovereign wealth fund with an estimated US$900 billion in assets, plays a key role in supporting the government's electric vehicle strategy.

These discussions take on added significance given Indonesia's Low Carbon Emission Vehicle roadmap, which mandates that electric motorcycles be produced locally with domestic content requirements reaching 80% by 2026.

Program scope and recovery efforts

Finance Minister Purbaya Yudhi Sadewa first proposed the incentive program in April, targeting an initial phase of around 6 million motorcycles. The government aims to support annual sales of 100,000 electric motorcycles through the new incentive package. The initial proposal calls for approximately Rp5 million per unit, though the final subsidy amount may change as the policy is finalized.

The incentive program comes as the electric motorcycle market seeks to recover from a sharp downturn. After the previous subsidy program offering Rp7 million per unit was abruptly discontinued in January 2025, electric motorcycle sales plunged by up to 70% in early 2025. That earlier subsidy had driven a 447% year-on-year surge in sales during 2024, reaching 63,146 units.

Despite Indonesia's total motorcycle sales reaching approximately 6.55 million units in 2025, electric motorcycles still represent less than 0.5% of the market, with 99.5% of sales still powered by internal combustion engines. The electric two-wheeler market was valued at approximately USD 600 million to USD 1.42 billion in 2025.

Strategic and economic rationale

Beyond environmental considerations, the Finance Ministry views the incentive policy as crucial for reducing Indonesia's fuel and crude oil imports, thereby strengthening economic resilience amid elevated global oil prices. The program aligns with the government's broader electrification target of having 15 million electric vehicles on Indonesian roads by 2030, including 13 million electric motorcycles.

Purbaya indicated the program remains under review and will require further discussions with Agus and Coordinating Minister for Economic Affairs Airlangga Hartarto before final implementation.