Indonesia Urges Toyota to Relocate Thai Factory, Offers Incentives

Indonesian Finance Minister Purbaya Yudhi Sadewa has formally requested that Toyota shift its manufacturing operations from Thailand to Indonesia. Speaking at the Gaikindo Indonesia International Auto Show (GIIAS) 2026, Sadewa assured Toyota executives that the Indonesian government would provide substantial incentives to facilitate this relocation.

"This time, we will increase the equity stake and provide sufficient incentives for you to move your manufacturing facilities from Thailand to Indonesia," Sadewa stated on Tuesday, August 4, 2026. He suggested that Toyota's previous decision to establish its Southeast Asian hub in Thailand might have been influenced by a lack of adequate incentives and an unfavorable investment climate in Indonesia at the time.

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This time, we will increase the equity stake and provide sufficient incentives for you to move your manufacturing facilities from Thailand to Indonesia.

The automotive sector is a vital component of the Indonesian economy, accounting for one-fifth of the national GDP and employing 1.5 million people. The industry's current installed production capacity reaches 2.5 million vehicles annually. Minister Sadewa emphasized the interconnectedness of the automotive industry with sectors such as steel, electronics, and logistics, while acknowledging that Indonesia still relies on imports for significant amounts of steel, electronics, and chemical materials.

To encourage deeper integration, Sadewa urged Toyota to increase its investment in Indonesia, particularly in supporting industries. "If you can bring supporting industries here, I will provide sufficient, or even greater, incentives," he declared. This initiative aligns with Indonesia's broader goal of strengthening its domestic industrial base and reducing reliance on imported components.

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If you can bring supporting industries here, I will provide sufficient, or even greater, incentives.