The Ministry of Industry (Kemenperin) has announced that the government will increase the domestic component level (TKDN) requirement for hybrid cars eligible for incentives to 60% in 2027, up from 40% in 2026.

Industry Minister Muhammad Sarmuji said that hybrid vehicles are already eligible for incentives, subject to several requirements, including investment value and domestic component content.

"Regarding incentives, hybrid vehicles are already eligible, subject to certain conditions. These include specific investment requirements involving trillions of rupiah, as well as minimum domestic component content," Sarmuji said at a press conference for the inauguration of the Indonesian-Made Shopping Heroes Programme at The Foodhall, Grand Indonesia, Central Jakarta, on November 10th, 2026.

He explained that the TKDN requirement for vehicles seeking incentives in 2026 was 40%. However, the government will increase this threshold to 60% next year. According to him, the Ministry of Industry has also consulted several automotive manufacturers whose current local component content is around 50% to 55%. The manufacturers indicated that they were willing to meet the 60% TKDN requirement in 2027.

"This year, the domestic component requirement for incentives is 40%, and next year, it will increase to 60%. We asked manufacturers whose local component content was only 50% or 55% whether they could reach 60% next year. On average, they agreed. This means they will continue to receive incentives, particularly in the form of tax or fiscal benefits," he explained.

In addition to fiscal incentives, Sarmuji stated that the government would coordinate the provision of non-fiscal incentives for low-emission vehicles. These could include exemptions from the odd-even traffic restriction policy. However, he clarified that the policy falls under the jurisdiction of the Jakarta Provincial Government and is therefore outside the Ministry of Industry's authority.

"The odd-even policy falls under the authority of DKI Jakarta. There is currently no such policy outside DKI Jakarta," he said.

Sarmuji said that low-emission vehicle technology in Indonesia was continuing to develop. Vehicles displayed at the Ministry of Industry's showcase included hybrid vehicles and battery electric cars. He noted that developments extended beyond pure electric vehicles to include hybrid cars with improved fuel efficiency.

"Some hybrid vehicles can achieve fuel efficiency of up to 33 km per litre. There are also more expensive models with zero emissions, as their emissions consist of water," he said.

He also highlighted the development of vehicles compatible with fuel containing ethanol blends of up to E20, although the government is currently planning to introduce E10 fuel.

"Some manufacturers can already produce vehicles compatible with E20 ethanol-blended fuel, even though the government is only planning to introduce E10. There are already vehicles compatible with E20 that also incorporate electric battery systems," he said.

Sarmuji added that growing public interest in electrified vehicles, including hybrids and battery electric vehicles, reflected changes in the national automotive market. He said that increased adoption of low-emission vehicles could help reduce energy subsidy expenditure and pollution levels.

"This could reduce subsidies and pollution while improving public security," he concluded.