Indonesia Pushes BYD for Local Component Commitment and Job Creation

The Indonesian government is intensifying its push for PT BYD Motor Indonesia, a Chinese electric vehicle manufacturer, to increase the local content of its vehicles to 60% by 2027. Currently, the local component level stands at approximately 45%, according to Minister of Industry Muhammad Sarmuji.

During a recent visit to BYD's manufacturing facility in Subang, West Java, Sarmuji emphasized the importance of using local components to enhance the value added to the domestic economy. “Every 1% increase in local content means an additional value for our local resources,” he stated.

To support this initiative, the government is encouraging BYD to collaborate with local suppliers. As of now, BYD has partnered with over 200 local suppliers providing various components, including tires and glass. The company has also committed to increasing its workforce from the current 6,000 employees to 20,000 as production ramps up.

“Every 1% increase in local content means an additional value for our local resources.”Muhammad Sarmuji, Minister of Industry

“We want to ensure that BYD's investments have a more significant impact on the local industry and communities,” Sarmuji said, highlighting the need for knowledge and technology transfer from foreign workers to local employees. The government plans to visit BYD's headquarters in China to discuss these commitments further.

BYD has already invested around IDR 11 trillion (approximately USD 740 million) in its Subang plant, which spans 126 hectares and has a production capacity of 150,000 vehicles per year. The facility integrates various manufacturing processes, from stamping to final assembly.

Head of Public Relations and Government Relations at BYD, Luther Panjaitan, expressed confidence in meeting the government's local content target. “We are optimistic that by 2027, all our products manufactured in Indonesia will meet the 60% local content requirement,” he said.

“We are optimistic that by 2027, all our products manufactured in Indonesia will meet the 60% local content requirement.”Luther Panjaitan, Head of Public Relations and Government Relations, BYD

In addition to increasing local content, BYD is also evaluating plans to establish a battery manufacturing facility in Indonesia, which is seen as crucial for achieving the local content target. Panjaitan noted that the investment for such a facility is still under internal assessment.

The Indonesian government has recognized the need for enhanced workforce skills to meet industrial demands, with Sarmuji stating that training programs are essential for local communities to align with BYD's operational needs. “We need to ensure that the local workforce is adequately trained to meet industry requirements,” he added.

As the electric vehicle market continues to grow, the Indonesian government is keen on fostering a robust local ecosystem for electric vehicle production, which includes not only manufacturing but also the supply chain and workforce development.