New Regulation, New Hope (?)
By: Muhammad Rizki Kresnawan
Tags: Low Carbon, Emissions, Battery, Electric Car, Indonesia

Image By Reuters

Can we escape from the thick smoke sheath in Jakarta?

During these last few months, Jakarta’s air pollution always on the top five (5) of the most polluted cities worldwide, according to the Airvisual data. Jakarta’s air pollution often on the unhealthy level that forced its citizens to reduce the outdoor exercise. The citizens of Jakarta urge to close the window as well to avoid the dirty dust from the outside. The pollutant such as PM (Particulate Matter) 2.5 and 10 in the smoky air can cause several respiratory diseases. Moreover, transportation becomes one of the sectors that produced these kinds of emissions.

In the report of the RE Outlook for ASEAN, it has shown the transportation sector as the second-highest contributor to the energy-related emissions. It was expected to still increase up to 35% compared to the reference level 2010. This increase is not having an inline growth with oil production that has a constant decreased since 2012 as per the report of the 5th ASEAN Energy Outlook. As the main of the preponderance of fuel sources, this fossil-based fuel becomes crucial to support the transportation sector. Unfortunately, the consumption of fossil-based fuel has wasted because of the extremely severe congestion rates in Jakarta and making the air condition even worse.

To tackle the smog issues caused by the congestions, the Government of Indonesia (GoI) released the regulation on low carbon vehicles policy. On Presidential Regulation number 55 in 2019 regarding the battery-based electric vehicle acceleration program for road transportation. In this regulation, GoI erased the taxes on the luxury car, as long as there are no exhaust emissions. With no exhaust emissions, electric vehicles are the solution to the high levels of air pollution, particularly in urban areas. Also, the regulation would provide for fiscal rewards, such as import tariff subsidies, and reducing the value-added tax deductions and tax subsidies.

Furthermore, the country also has been gearing up to realise its ambition of becoming a major producer of electric vehicles. Even though the GoI did not provide the details of the latest regulations, but it seems like Indonesia is open for investment with generous incentives which attract the investors. It proved with the announcement from Hyundai Motor Company who planned to spend a $2.8 billion investment in electric vehicle development in West Java, last July 2019.

However, to boost electric vehicle development in Indonesia is not just about the vehicle manufacturer itself. It is also the battery industry and the fast-charging stations. By mass-building on battery industry and fast-charging stations at some points also be a concrete solution for Indonesia to meet the increased demand for electric vehicles in the upcoming years. With Indonesia’s ubiquitous resources of materials required for making the batteries would help push prices go down.

It is not too far to talk about the future of electric vehicles in Indonesia. There are several benchmarks in worldwide on how the success countries bolster their electric vehicle deployment. Several countries in Europe have started using electric cars and continuously leaving conventional vehicles, and Norway is one of them. Through the government regulations on the electric vehicle, such as exemption from annual taxes, freeing on the toll road (especially electric cars) and free parking, Norwegian government success to boost the development of electric vehicles their respective country.

With aims to become an electric vehicle hub for Asia, Indonesia is ready to walk the talked on realising its ambitious target and reaching the share of electric vehicle output 20% of total car production by 2025. (MRK)