Three years ago, President Joko Widodo signed Presidential Directive No. 7 of 2022 on the Use of Battery Electric Vehicles as Business Service Vehicles and/or Personal Service Vehicles for Central and Local Government Agencies. The directive essentially instructs all ministries, agencies, and local governments to immediately prepare the necessary infrastructure to transition from fossil fuel-powered official vehicles to electric vehicles.
One of the ministries that has begun this transition is the Ministry of State-Owned Enterprises (SOE), which recently began using electric vehicles as service vehicles for its senior officials. The initiative aims to build an electric vehicle ecosystem, accelerate the energy transition, and reduce fuel consumption. According to Minister Erick Thohir, the use of electric vehicles (EVs) can significantly reduce budget expenditures, especially on fuel costs, estimated to be up to 60% lower.
The policy is in line with the government’s commitment to implement a green economy and be a leader in the renewable and clean energy sector, paving the way for a Net Zero Emissions (NZE) roadmap by 2060. However, one aspect that seems to have been overlooked is the fate of legacy government vehicles: will they remain as government assets, be put up for public auction or be disposed of?
Keeping traditional service vehicles parked at government agencies is the most practical decision during this transition period. The main reason is that since the use of EVs is still optional and not mandated by regulations, leasing becomes a more sensible option for the agencies involved. This avoids the need for large-scale procurement and it is listed as a fixed asset on the balance sheet. Hence, if the EV lease period ends or the policy becomes unpopular, they can revert back to their original policy without any issues.
However, idle assets also incur costs. Regular maintenance costs and fuel consumption cannot be ignored. Cars should not be left idle for long periods of time, but at least be started and used regularly. Just as muscles atrophy if not used, cars will deteriorate significantly and maintenance costs will increase if not used regularly. Far from achieving efficiency, it will lead to mutual subsidies.
The second option is auction. Government auctions are common, especially for official vehicles that have reached the end of their useful life (5 years). From the government’s perspective, this option has several advantages: a) removal of unused state assets, b) reduction in maintenance and fuel costs, c) contribution to the national treasury through tax-free state revenue from auction proceeds, and d) demonstrating a strong commitment to the public towards the use of EVs.
It is important to note that while auctioning of conventional vehicles is possible, replacement EVs will need to be purchased, not leased. If the old vehicles are auctioned while their replacements are still leased, the government will lose flexibility in their use. Since public vehicles are utmost utilized to support the government’s endless operational activities, EV leasing companies will naturally be concerned about this and will draft very strict lease agreements, limiting the government’s operational freedom.
From the public’s point of view, auctions are eagerly awaited by people looking to buy well-maintained used cars at reasonable prices. As you know, the auction prices of official vehicles are generally cheaper than the market prices of used cars, including used electric cars (EV tax incentive policies notwithstanding). Here the principle of maximum results with minimum sacrifices applies. So, if you are faced with two choices – to buy a subsidized electric car or to buy an affordable used conventional vehicle, whether you are a former official or not, you already know the answer. Not to mention taking into account the availability of gas stations, spare parts, regular service costs, taxes and other expenses.
The final option would be to scrap and dispose of unused government vehicles, but this is nearly impossible. There is no strong reason for governments to do this and it is considered inefficient: they are expensive to buy, expensive to maintain, and there is no financial benefit to be gained from auction proceeds. Scrapping relatively new conventional vehicles and switching to EVs would only show the public that the government is wasting money; that money could be allocated to government programs with a broader impact, such as education, health, and welfare, where the public needs it most.
The government has shown its commitment to reducing air pollution and urged its citizens to do the same. However, a new problem has emerged: the correlation between the increase in the number of vehicles and traffic congestion. It is questionable whether the government has seriously considered the impact of this policy. Not only the environmental aspect, but also the comfort and efficiency of urban transport are equally important.
For example, according to data from the Indonesian Central Statistics Agency, the number of passenger cars in Jakarta province in 2022 will reach 3.7 million, an increase of about 250,000 cars per year. This does not include all types of vehicles, and the total for the same period is about 22 million cars. This vehicle explosion has caused Jakarta’s congestion level to rank 9th among the world’s 200 major cities in the Traffic Index for 2024. If the government does not have the awareness to look at this issue from multiple angles, the transition policy to EVs will have a significant impact on the amount of vehicles on the road. Please note that the above data only includes registered vehicles in Jakarta and does not mention the capital workers’ residence in the surrounding satellite areas such as Bogor, Depok, Tangerang, and Bekasi. This situation makes the actual ground number much higher than the one presented.
In fact, there are several countries that have successfully transitioned from conventional vehicles to electric vehicles, such as Norway, Iceland, Sweden, the Netherlands, and China. These should be examples for Indonesia. However, it should also be emphasized that these countries are developed countries with proper public transport systems, pedestrian-oriented infrastructure, integrated public mobility, and a collective consciousness among their citizens to prioritize public transport for the common good.
Given these success stories, the Indonesian government should first focus on strategies to reduce vehicle volume and congestion in major cities before rushing to implement policies to introduce EVs as public vehicles. Actions the government should take include optimizing existing public transport, comprehensively expanding the network to suburban areas, building pedestrian-friendly urban infrastructure, strictly restricting the use of private cars, and most importantly, building people’s awareness of using public transport for environmental, social, and economic sustainability.
