June 23, 2026
JAKARTA – Two major Japanese automotive component manufacturers operating in East Java are considering relocating part of their production to Vietnam and could carry out large-scale layoffs in Indonesia as they shift their focus toward electric vehicles, according to Said Iqbal, special presidential advisor for employment and workers’ welfare.
The companies are reviewing plans to move production to countries deemed more competitive for electric vehicle (EV) development, potentially affecting thousands of workers, Said, who also serves as president of the Confederation of Indonesian Trade Unions (KSPI) and chairman of the Labor Party, stated on Sunday.
“Their parent company in Japan plan to relocate production to countries that are considered more productive while diversifying their product lines. They will focus on EV, and that development is being carried out in Vietnam, not Indonesia,” Said told an online press conference, as quoted by Kompas.com.
The issue ultimately reflects broader questions surrounding the country’s electric vehicle policy framework.
Said added that those companies believe EV manufacturing in Indonesia is less competitive, while Vietnam has rolled out policies that are more supportive of EV investment.
Said declined to identify the companies but said they are major automotive component manufacturers located in Pasuruan and Mojokerto, East Java, referred to them only by the initials PT J and PT S.
“There are two giant automotive component companies in Pasuruan and Mojokerto. I cannot disclose their names yet, but thousands of workers could be affected by layoffs,” he said.
Said noted he had tasked the Indonesian Metal Workers Federation (FSPMI), a union affiliated with the KSPI, with opening talks with management in a bid to convince the company’s Japanese parent not to move its operations to Vietnam.
The outcome of those discussions would be conveyed later to President Prabowo Subianto, State Secretary Prasetyo Hadi and Deputy House of Representatives Speaker Sufmi Dasco Ahmad, he added, who was appointed to be part of the president’s advisory post earlier this month.
“What steps will the government take? This is fundamentally a policy issue, particularly policies related to EV,” he added.
The reported relocation plans come as Indonesia’s EV industry faces uncertainty over government incentives that have lapsed.
Several measures introduced to support electric vehicle adoption in Southeast Asia’s largest economy have expired, including subsidies for new electric motorcycles, which ended in late 2024, and incentives for electric passenger cars, which expired at the end of 2025. Neither program has been formally extended.
The government also reversed plans earlier this year to remove certain tax incentives for electric vehicles following industry backlash, adding to uncertainty over the regulatory environment for EV investment.
The government is preparing a new package of EV incentives and aims to implement it in July, although details “are still being finalized” as the Finance Ministry recalculate subsidy levels, Deputy Industry Minister Faisol Riza said on Thursday.
Finance Minister Purbaya Yudhi Sadewa previously said the government is considering a Rp 5 million (US$280) subsidy for up to 100,000 electric motorcycles. For electric cars, incentives could include government-borne value-added tax exemptions ranging from 40 percent to 100 percent, depending on battery technology, covering as many as 100,000 vehicles.