What Australia can learn from electric vehicle policies in Indonesia

The Indonesian Government is making an effort to encourage drivers to go electric in an effort to reduce traffic and air pollution, writes John Thompson.

JAKARTA IS the world’s tenth most congested city. It’s so congested you might not even notice when half the cars are missing. Today it’s the odds; car license plates – all ending in ones, threes, sixes and nines – are shuttered inside garages or parked on streets. Tomorrow, the same will be true of the even-numbered plates.

That is, unless you’re driving an electric vehicle.

The odd/even policy as it’s known is intended to reduce both central Jakarta’s traffic and air pollution. On select main roads and highways, cars with odd-numbered plates can only drive on odd dates — for even dates the opposite is true.

Marius Pratiknjo, a member of the otherwise sacrosanct classic car community, converted his prized purple vintage Citroen Mehari to an electric motor this year. Pratiknjo says that, in addition to being exempt from the odd/even policy, he’ll soon be paying less for registration, less for permits and even less for fuel. “More incentive for the electric car,” he explains. “We just feel special.”

*Marius Pratiknjo's purple Mehari (Image supplied)*

The Indonesian Government hopes that with incentives such as these, 20% of the vehicles manufactured in Indonesia will be either hybrid, plug-in hybrid or fully electric by the year 2025.

So, what can Australia, now the only country in the world to actively tax electric vehicles, learn from our closest international neighbour?

Following in the footsteps of South Australia, the Victorian Government’s new electric vehicle tax, announced by Treasurer Tim Pallas prior to the state Budget announcement, consists of a 2.5 cent per kilometre charge on electric and zero-emission vehicles — including hydrogen. Hybrid vehicles will also incur a slightly smaller two cent per kilometre charge.

The plan is expected to generate approximately $30 million a year. The revenue, which will not be reinvested into the electric vehicle industry, will instead supposedly contribute to road repair and maintenance.

The Victorian Government claims that since electric vehicles run independent of petroleum, they do not contribute to fuel excises — primarily a tool used for revenue-raising.

Treasurer Pallas stated:

"If you’re not filling your vehicle up with petrol, then ultimately you’re not paying your share of maintenance costs of dealing with our road system.”

Yet the higher cost associated with purchasing electric vehicles does result in higher registration fees and motor vehicle duties, a fact acknowledged by Dr Jake Whitehead, Research Fellow at the University of Queensland and expert in e-mobility and the electric vehicle (EV) industry.

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Dr Whitehead explains:

“EV owners already contribute more tax than comparable petrol or diesel vehicles, so it is incorrect to claim they are not contributing taxes. The tax contribution is higher due to the higher costs.”

Despite allocating $45 million for the expansion of Australia’s EV charging station network – disclosed in Victoria’s 2021 Budget – which the Government claims will ‘more than offset’ the new tax, neither the Victorian nor Federal Government have announced a target for the distribution or uptake of low and zero-emission vehicles.

The establishment of a target would send clear signs to consumers and industry stakeholders that the Government supports and will be accountable for the transition away from high-emission vehicles. Their refusal to do so stifles the growth of what could be a lucrative new industry.

“I think government has to climb up. In terms of regulations — it's easy, don't make it hard on people, because then they will have antipathy,” said Hendro Sutono, an unassuming property developer and electric vehicle enthusiast from central Jakarta. Despite his passion, Sutono rarely uses electric vehicles, opting instead for public transport where he can avoid the stifling smog of traffic in gridlock.

Jakarta’s air pollution isn’t just bad, it’s toxic. According to research by the University of Chicago, the air alone is cutting almost two-and-a-half years from the average resident’s lifespan. Including Sutono’s.

Sutono hopes that “easier rules” will result in much more of Jakarta’s 1.38 million commuters transitioning to low or zero-emission vehicles. Commuters whose gridlocked engines would otherwise run idle, spluttering putrid air.

Sutono explained:

“Because when I'm using my electric cars in the traffic jam, the man behind me is happy because I'm not emitting any exhaust gas. But I'm not.”

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If Indonesia’s electric vehicle policy is effective at achieving the 20% target set by President Joko Widodo last year, it is highly likely given current growth statistics that Indonesia, a developing country, will have a significantly higher percentage of electric vehicles than Australia by 2025.

According to the Electric Vehicle Council’s 2020 report, 6,718 electric vehicles were sold in Australia during 2019, which represented 0.6% of Australia’s total new car sales and a 300% increase in electric car sales from 2018.

Data provided by the Association of Indonesia Automotive Industries (GAIKINDO) shows that Indonesia’s total electric vehicle sales totalled approximately 15,524 in 2019, or 1.5% of Indonesia’s total vehicle sales. Almost all were scooters and motorbikes. Only 24 were cars — a 2,300% growth from 2018 when only a single car was sold.

Indonesia’s economic incentives have also attracted investment from private interests. The ubiquitous taxi company Blue Bird Group, which operates across Indonesia, has this year introduced 200 electric vehicles to its Jakartan taxi fleet. A further 2,000 have been slated for introduction by 2025.

Fergi Verdisanya has been a driver for the Blue Bird taxi group for five years, ferrying airport-goers to and from hotels. He has a perfect record, the kind that qualified him to drive one of what was at the time only 30 new Blue Bird e-taxis.

Verdisanya says his passengers have already started asking about the car and thinks that with enough time and investment customers will soon embrace the new. “This one is way better, it has an automatic transmission, it’s roomier and...” (at this point, a motorcycle roars past and he stops for a moment) “...it’s quieter,” Verdisanya finishes with a faint smile.

Much like Australia, the most significant impediment facing Indonesia’s burgeoning electric vehicle industry is the availability of charging stations. At present, Blue Bird operates 11 such stations at its taxi depots, a further 20 are currently available to the general public, most are managed by private interests such as mega-mall Grand Indonesia.

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Indonesia’s state-owned energy supplier Perusahaan Listrik Negara (PLN) estimates that Indonesia will require 31,000 stations by 2030 in order to accommodate current government targets. Unlike Australia, the construction of this network will not be primarily facilitated by government investment, such as the $45 million earmarked for development in this year’s Victorian Budget. Instead, the onus is on private players, with indirect support from the Government through tax and grant incentives.

GAIKINDO co-Chairman Jongkie Sugiarto said:

“Very simply, if we rely on the Government, it will take too long until they can install all of these charging stations.”

Representing GAIKINDO, Sugiarto suggested to the Ministry of Energy that instead, the Government should pass a mandate requiring hotels, shopping malls and office buildings to equip 1% of their available parking spaces with electric charging stations:

“For instance, a hotel owner such as Grand Hyatt Jakarta would have 500 parking lots. Okay, equip it with five charging stations. Or an office building owner which has 300. Okay, equip it with three. So, within six months you will have maybe 5,000 charging stations all over Jakarta.”

The Government's obligation, Sugiarto says, would be to simply exempt recharging equipment from import duties. He believes that the private sector wouldn’t object to the proposed regulation and that, much like the introduction of air conditioning 50 years ago, the stations could represent a significant promotion of their business.

Sugiarto explains:

“If companies can say ‘come and shop with us here, I have a charging station’, it is a promotion for them and the customer can pay for a half-an-hour charge whilst drinking their Starbucks coffee.”