Indonesia asks Toyota to move main production hub out of Thailand
Indonesia’s finance minister has publicly invited Toyota to move its main Southeast Asian manufacturing operations from Thailand to Indonesia, offering the Japanese carmaker incentives to support a potential relocation.
Purbaya Yudhi Sadewa made the proposal on August 4 at the Gaikindo Indonesia International Auto Show in Tangerang, where he spoke directly to a group of Toyota executives.
“We will support Toyota, but they must bring their main manufacturing operations from Thailand to Indonesia. We will provide all required incentives,” Purbaya said.
He also called on Toyota to bring its supplier base to Indonesia, noting that many components used by manufacturers in the country are still imported.
Purbaya suggested that Toyota originally chose Thailand because Indonesia had previously offered insufficient incentives to foreign investors and had a weaker investment climate. He said those conditions have since changed.
“We are the largest country in ASEAN. Why should the centre be in Thailand?” he said.
The finance minister pointed to Hyundai’s manufacturing investment in Indonesia as evidence of the country’s ability to attract major carmakers. He also highlighted efforts to streamline licensing procedures across government ministries.
Purbaya said the automotive sector accounts for around one fifth of Indonesia’s economy, employs 1.5 million people and has an installed production capacity of 2.5 million vehicles per year.
The incentive package outlined by Purbaya includes a luxury goods sales tax exemption of up to 100% and a 40% government-borne VAT reduction for qualifying vehicles.
The measures apply only to battery electric vehicles, with hybrids and plug-in hybrids excluded. Final details are expected to be announced by Indonesian President Prabowo Subianto.
Toyota Motor Corporation has not responded to the proposal or announced plans to relocate its manufacturing operations from Thailand. There is also no indication that the company is considering such a move.
Thailand has served as a major automotive manufacturing base in Southeast Asia for decades, supported by incentives designed to attract manufacturers and their supply chains.
Indonesia, meanwhile, has a larger domestic market and is expanding incentives for battery electric vehicles as regional countries compete for automotive investment. Thailand operates its own EV incentive programme targeting investment in the sector.
The Indonesian proposal therefore remains an offer from the government rather than an announced change to Toyota’s manufacturing strategy.
