Indonesia Offers Toyota Incentives to Shift Production Hub From Thailand

Indonesia is actively seeking to attract Toyota Motor Corp. to shift its primary vehicle production hub from Thailand to Indonesia, offering substantial incentives to achieve this goal. Finance Minister Purbaya Yudhi Sadewa stated that the move would significantly bolster Indonesia's ambition to become a leading global automotive manufacturing center and enhance its domestic supply chains.

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We will support Toyota, but they must bring their main manufacturing operations from Thailand to Indonesia. We will provide all required incentives.

"We will support Toyota, but they must bring their main manufacturing operations from Thailand to Indonesia. We will provide all required incentives," Sadewa announced at the 2026 Gaikindo Indonesia International Auto Show. He also urged Toyota to relocate its supporting industries to Indonesia, highlighting the current reliance on imports for many materials and components used by local automakers, including steel, electronics, and chemical products.

To facilitate this transition and boost the automotive sector, the Indonesian government is committed to improving the investment climate and preparing targeted fiscal incentives. The minister acknowledged that past incentive offerings might have been insufficient or the investment climate not sufficiently mature, pledging serious improvements. The automotive industry in Indonesia currently employs approximately 1.5 million workers and produces around 2.5 million vehicles annually.

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If you bring your supporting industries here, we will provide sufficient, or even greater, incentives.

Furthermore, President Prabowo Subianto is expected to announce new incentives for electric motorcycles and cars within the next few weeks. These measures will include exemptions on luxury goods sales tax of up to 100 percent and a 40 percent government-borne value-added tax reduction for qualifying battery electric vehicles (BEVs). While hybrid and plug-in hybrid electric vehicles will not be eligible, specific incentives will differentiate between nickel-based and lithium-based battery EVs, with the president set to reveal the final details.

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Perhaps we previously did not provide enough incentives to foreign investors, or our investment climate was not mature enough. We will seriously improve it.