The “TKDN” Policy Relaxation Dilemma: Balancing Foreign Investment and EV Industry Self-Sufficiency

Indonesia’s electric vehicle (EV) strategy relies on Local Content Requirements (TKDN) and fiscal incentives to attract investment, develop domestic manufacturing, and capitalize on its nickel resources. Rapid EV market growth has drawn major foreign players such as Hyundai and Wuling, yet repeated relaxation of TKDN targets—due to ecosystem and infrastructure constraints—has allowed many OEMs to continue importing vehicles while still benefiting from incentives. Simultaneously, the nickel export ban and downstreaming policy have increased dependence on foreign capital and expertise in battery and smelter development. As a result, policies aimed at strengthening industrial independence have, in practice, reinforced foreign dominance in the EV supply chain. The upcoming TKDN targets will be a key test of whether Indonesia can convert incentives into meaningful local value creation.

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