On August 4 during the Gaikindo Indonesia International Auto Show in Tangerang, Finance Minister Purbaya Yudhi Sadewa publicly invited Toyota to move its main Southeast Asian manufacturing operations from Thailand to Indonesia. He offered significant financial support for a relocation and urged the company to bring its supplier base as well, noting that many components used by manufacturers are currently imported into the country.
The proposal cites improved investment conditions in Indonesia compared to previous years, pointing to Hyundai's existing manufacturing presence as evidence of success. To attract investors, Sadewa outlined an incentive package including a luxury goods sales tax exemption up to 100% and a 40% government-borne VAT reduction for qualifying battery electric vehicles only; hybrids are excluded from these measures.
The automotive sector accounts for approximately one-fifth of Indonesia's economy with an installed production capacity of 2.5 million vehicles per year, employing 1.5 million people. While final details on President Prabowo Subianto's incentives remain to be announced and Toyota has not yet responded or confirmed plans to move its hub from Thailand, the offer highlights ongoing regional competition for automotive investment in Southeast Asia.
Do you think these tax exemptions will influence Toyota’s decision regarding their production location?