Government action needed to kick-start Indonesia's electric vehicle market

11 July 2018 Consultancy.asia

In a new report examining the Indonesian government’s national agenda for electric vehicle adoption, the Asian-centric strategy firm Solidiance has outlined several key areas of focus if its challenging targets are hoped to be achieved.

In accordance with the Indonesian government’s commitment to reducing the nation’s carbon emissions and high dependency on limited oil reserves, the government has identified the local transportation sector as a major area for address, with a national roadmap established to advance the automotive industry and promote greater electric vehicle adoption.

The ambitious uptake targets for electric vehicles in the country have been set at 2.1 million units for 2-wheeled vehicles by 2025. Yet, as it stands, there are approximately only 3,000 electric bikes currently on Indonesian roads. And while there were 1,300 charging stations available nationwide last year, the large majority of them were located in just the Jakarta area.

As a response, the Asian-centric strategy and management firm Solidiance has conducted a market analysis and consumer survey on the subject, with the consulting firm suggesting in its resulting white-paper, 'Electric Vehicles in Indonesia: the Road Toward Sustainable Transportation', that these targets are unlikely to be achieved at current adoption rates unless certain key areas are first addressed; specifically, improved infrastructure and clearer regulation. 

Awareness on electric vehiclesTaking the pulse of 100 local motorcycle owners on their awareness and perceptions surrounding electric motorbikes, 37 percent were not yet aware that an electric bike model was available in the country. In terms of willingness to purchase an e-bike in the coming two years, only 17 of the respondents showed interest, although e-bikes were believed to be more fuel efficient and require less maintenance, capturing 95 percent and 84 percent of the feedback.

Outweighing these positives, was the negative response to ‘riding range’, cited by 68 percent of the respondents as a drawback, along with ‘model and appearance’ and ‘dimension and size’ (84 and 79 of those surveyed respectively), and charging infrastructure, a detracting feature for over four fifths of potential bike-riding customers.Perception on electric vehiclesIn the corresponding survey with local car owners, less than half knew that e-cars were available for purchase, and just 9 of the 100 respondents said that they would be willing to purchase an electric car in the next two years. While ‘model and appearance’ differed from the bike category, which for e-cars gained the tick of approval from 78 of those surveyed, the negative concerns for e-cars were the pricing and again the driving range and charging infrastructure.

Looking to the successful electric vehicle markets of China and Norway, the report contends that the Indonesian government will need to be the first step in the chain to help address these concerns, with clearer regulation and policy and the incorporation of incentives. With incentives, the cost per unit can be lowered, while without a ‘reward and punishment’ policy, the manufacturers will sit on their hands.

Infrastructure players, too, will be planning to wait until the above unfolds to get a clearer picture of the market – creating a vicious cycle with consumer perceptions of poor infrastructure negating purchasing and then delimiting market development. Yet, while the government can get the ball rolling, the report concludes that “active participation from all relevant stakeholders is required in order to create an ecosystem that is able to address the right issues and create significant traction for the Indonesian market.”

Big Four give tick to enterprise initiatives in Singapore 2019 budget

20 February 2019 Consultancy.asia

The Singapore budget has landed for 2019, and the Big Four professional services firms have been quick to weigh in – giving their thumbs-up to a range of business development initiatives.

Singapore's Minister for Finance Heng Swee Keat has delivered the city-state’s ‘expansionary’ 2019 budget – aimed at building “a strong, united Singapore” – with a raise in GST from 7 to 9 percent, a ‘Bicentennial Bonus’ for lower income groups, and a S$1 billion package to help businesses build deep capabilities among the announcements. Following the budget release, the Big Four were quick to respond.

“As the Finance Minister promised, SG Budget 2019 is progressive and builds on the measures and initiatives put in place in the past couple years,” Deloitte Singapore and Southeast Asia Regional Managing Partner for Tax Low Hwee Chua said. “It continues the recent focus on driving enterprise innovation and growth; increasing productivity of Singaporean workers and strengthening the social framework.”

Following on from last year’s budget in which it was announced a tax would be levied on imported professional services from 2020, this year has seen a tightening on foreign worker ratios in the services sector – together with a number of new and expanded initiatives aimed at developing Singapore into a world-leading talent and innovation hub, including an extension of the state’s professional conversion programme, of which Deloitte is a consulting sector participant.Big Four give tick to enterprise initiatives in Singapore 2019 budget“The Finance Minister sees an external environment with continuing geopolitical uncertainty, a continuation of the digital revolution and slowing global growth,” PwC Global Tax Markets Leader Peter Le Huray said in summary. “The Budget response is a focus on security, particularly cyber security and a targeted approach to expediting digital skills and re-skilling the workforce with less reliance on foreign manpower.”

Among the enterprise initiatives, altogether worth S$1 billion, are two new customised programmes – Scale-up SG and Innovation Agents – to respectively help high-growth local firms to innovate, build new capabilities, and expand overseas and to provide other firms with mentorship and consultation on innovation opportunities from industry experts through a matching process. The government will also provide even greater support for enterprise and government digitisation efforts.

The response to the measures from the consulting sector has been widely positive, with Ernst & Young’s Head of Tax Services Soh Pui Ming stating; “Transformation is a journey, not a destination. Budget 2019 recognises this, and continues to provide support to help Singapore enterprises to deepen capabilities, innovate and internationalise in order to compete in the new global economy.”

Tay Hong Beng, KPMG Singapore’s Head of Tax, concludes; “In deepening enterprise capabilities, it’s important that the Government has recognised the need to provide and tailor-make support and assistance to businesses based on their differing stages of development and needs. This is a good departure from the traditional broad brush approach which may not meet the needs of businesses.”