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View all search resultsLocal content rules, incentives in focus as Indonesia’s EV edge fades
Indonesia needs to work on "the sequencing and design" of its local content rules to encourage the development of domestic manufacturing capabilities while attracting investment to its EV sector, according to Arthur D. Little.
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Automated machines paint a vehicle frame at BYD’s first new energy vehicle (NEV) manufacturing facility at Subang Smartpolitan, an industrial estate in Subang regency, West Java, in this undated handout photo. (BYD/-)
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ndonesia needs to recalibrate its local content rules for electric vehicles to attract investment, since domestic suppliers of advanced components may not yet be competitive on cost, quality or scale, a consulting firm says.
“The issue is therefore not localization itself but the sequencing and design of localization requirements,” said Akshay Prasad, principal at Arthur D. Little (ADL) Southeast Asia, told The Jakarta Post on Oct. 12.
He suggested tailoring requirements to component complexity, supplier availability and technological maturity with a phased road map from vehicle assembly to selected components and higher-value technologies.
Such an approach would allow Indonesia to build domestic manufacturing capabilities while keeping investment commercially viable, Prasad said.
Southeast Asia’s biggest economy has several advantages, including a large market for motorcycles, abundant natural resources and potential to develop an integrated EV and battery industry. However, regional competitors have made faster progress in building the supplier networks and infrastructure needed to support EV manufacturing and adoption.
According to ADL’s Global Electric Mobility Readiness Index (GEMRIX) 2026, Indonesia’s score rose from 40 in 2023 to 49 this year, although its ranking slipped from 21st to 24th after 11 markets were added to the index.
Meanwhile, Thailand scored 57 and Vietnam 60.
