Indonesia's electric two-wheeler industry has raised concerns that uncertainty over government incentives is affecting sales, with consumers delaying purchases and manufacturers and dealers facing reduced demand. Some dealers could potentially be forced to close as sales remain affected by the lack of clarity over the incentive programme.

Industry players had been waiting for a planned IDR 3 trillion (US$ 167 million) incentive programme that would provide buyers with a discount of IDR 3 million per locally manufactured electric two-wheeler. The programme was expected to be implemented earlier this year, but the government has changed its timeline several times and has yet to provide certainty over when the incentive will be disbursed.

The uncertainty over the incentive programme has affected purchasing decisions, with consumers postponing electric two-wheeler purchases while waiting for clarity on whether the discount will be made available.

"The government should not hesitate to provide the incentive. Why is this going back and forth, with us still waiting for when it will actually be implemented?" Moeldoko, chairman of the Indonesian Electric Vehicle Industry Association (Periklindo), said during a House of Representatives hearing with Commission VII, which oversees energy.

Moeldoko, who previously served as presidential chief of staff under former president Joko "Jokowi" Widodo, said the uncertainty had resulted in stagnant sales for manufacturers and dealers and could lead to some dealers going out of business. He said the government should regard incentives not simply as a cost to the state, but also as a measure to support the transition from petrol-powered vehicles.

According to Moeldoko, wider electric vehicle adoption could reduce the government's fuel subsidy burden while lowering mobility costs for consumers through savings on fuel and operating expenses. It could also contribute to improved air quality. However, repeated announcements about extending the incentive without implementing the programme have left businesses without certainty for planning and have affected sales activity.

Moeldoko urged lawmakers to push the government to provide greater certainty instead of repeatedly extending or reconsidering the incentive programme on an annual basis.

"The policy is only for one year," he said. "The following year there is another promise, waiting, and it still has not come down. This does not provide certainty for industry players."

The industry's sales figures indicate a decline. Indonesia had a large two-wheeler fleet on the road in 2025, according to Statistics Indonesia (BPS), with electric two-wheelers accounting for a small share of the overall two-wheeler market.

"It has fallen very significantly because it is related to government policy," Aismoli chairman Budi Setiyadi said during a House hearing.

Budi said changes in government policy were affecting sales because many consumers were postponing purchases while waiting to see whether incentives would be reinstated.

"The government's policies, which are sometimes available and sometimes not, are quite disruptive to the industry, as many people are waiting to see when subsidies will be provided," Budi said.

The industry also faces issues beyond incentive uncertainty that could affect electric two-wheeler sales. Budi identified the availability of charging infrastructure as one factor affecting wider electric two-wheeler adoption. Consumers also remain concerned about the availability of repair shops and service networks if their electric two-wheelers require repairs.

Financing is another issue affecting purchases. Aismoli has held discussions with the government and banks, including Himbara banks, to encourage financing for electric two-wheelers. Budi said financing institutions had expressed their readiness in principle to support electric vehicle development, but implementation continued to face obstacles.

"If asked to support electric two-wheelers, we're ready to fund them. However, we're still facing obstacles in implementation," he said.

Aismoli said Indonesia has the potential to develop its electric two-wheeler industry beyond the domestic market and become an exporter to other ASEAN countries. Budi said Indonesia holds a position in the electric two-wheeler industry association at the ASEAN level and that developing the domestic electric vehicle ecosystem could support an increase in electric two-wheeler exports.

Before pursuing greater access to export markets, however, the industry said several domestic issues need to be addressed, particularly certainty over government incentives, the availability of charging infrastructure, the development of repair and service networks, and access to financing. These factors are also relevant to the industry's ability to increase electric two-wheeler sales in the domestic market.

Budi said the uncertainty surrounding incentives was affecting the industry because consumers were waiting for clarity before making purchases, resulting in lower sales for manufacturers and dealers.

"This is quite disruptive to the industry because many people are waiting," he said.