Indonesian president Joko Wikodo issued a raft of new controls on August 8, 2019. His new electric vehicle registration system starts making a deal of sense as the dust settles. Indeed, this appears to be a rare attempt to manage the market comprehensively almost from the beginning. The full title is Presidential Regulation No. 55 of 2019 the Acceleration Program for Battery-powered Electric Vehicles for Road Transportation.
Main Thrusts of the New Electric Vehicle Registration Regulations
PR 55 / 2019 – the short title – incentivizes local manufacturing initiatives provided they meet local content requirements. However, the new electric vehicle registration system will progressively increase this threshold.
Lexology.Com warns the cost and availability of local content may hold prices of electric vehicles above combustion ones. This may in turn suppress EV vehicle demand and discourage local manufacturing the government wants to encourage. There is also uncertainty whether the government will allow private EV charging stations. A state corporation currently has the distribution monopoly.
EV Battery Recharging Tariffs May Hold the Key
The new electric vehicle registration system for Indonesia allows the government to set the charging tariff. There is however no mention of the government subsidizing this rate. If the net rate is too high, then Lexology.Com fears this will discourage the electric vehicle rollout rate too.
Thus the regulations, as they stand may be too fluid to attract significant private investment. The government has promised further ‘implementing rules’ within twelve months. These may have a significant bearing on the environmental and economic benefits the EV program achieves. If the government does succeed in stimulating manufacturing interest, then a variety of new private initiatives could follow.
These may include battery, drive train, and even complete vehicle factories. We also anticipate acceleration in lithium and copper mining. Indonesia’s new electric vehicle registration model therefore holds promise, provided the government strikes the right balance.
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