BYD in Indonesia is making it seem as if CKD will not be possible short term in Indonesia.
The concerns raised by Chinese automotive giant BYD in Indonesia regarding the potential end of vehicle incentives mirror a widely shared sentiment among electric vehicle (EV) manufacturers operating in Malaysia, particularly as crucial tax exemptions are scheduled to lapse in 2026.
In Indonesia, BYD hopes the government will continue its vehicle incentives in 2026 to ensure the positive sales trend of emission-free vehicles continues. The Head of Public and Government Relations for BYD Indonesia, Luther Pandjaitan, stated that if incentives are not extended, the company would “lack confidence” that continuous growth can be sustained. This is compounded by the Indonesian government confirming that the tax facility for Completely Built-Up (CBU) EV imports only applies until December 31, 2025. Starting January 1, 2026, manufacturers in Indonesia must meet local production commitments. For context, BYD will make vehicles in Indonesia some time in early 2026 through a factory in Subang, West Java.
In Malaysia, a similar policy structure is guiding the market’s transition:
- CBU EV Incentives End: The full exemption on import and excise duties for fully imported (CBU) EVs is set to end on December 31, 2025.
- CKD EV Incentives Extended: The corresponding exemptions for locally assembled (CKD) EVs will remain in effect until 2027.
- Road Tax: The full road tax exemption for EVs also ends on December 31, 2025, with a new, generally lower, power-based tiered tax system taking effect in 2026.
Lobbying Efforts and Strategic Investment
While there is no explicit public statement from individual Chinese Original Equipment Manufacturers (OEMs) like GWM or Chery about lobbying for CBU incentive extensions, the general industry body, the Malaysian Automotive Association (MAA), has formally urged the government to extend existing tax incentives in the upcoming Budget 2026.
The MAA has specifically proposed extending CBU incentives to 2027 and CKD incentives to 2030. The association argued that CBU models often feature the latest technology, which is important for boosting consumer confidence and accelerating the shift from Internal Combustion Engine (ICE) vehicles.
Crucially, the policy change is seen by analysts as a strategic move to encourage foreign automakers to invest in local assembly (CKD) and component production rather than simply shipping cars duty-free. In essence, while the Chinese manufacturers likely share BYD’s anxiety about losing CBU incentives, their primary strategy in Malaysia is now focused on localizing production to secure the longer-term CKD tax exemptions and remain competitive.
