By: Rizki Kurnia)*
Electric vehicles are predicted to be one of the focuses of the Indonesian government in terms of investment. This is shown by the government’s success in capturing new commitments from large-scale automotive industry players from Japan with a total of Rp 37 trillion for the electric-based motor vehicle program within the next five years.
The funds came from Toyota Motor Corporation (TMC) for the development of new hybrid cars and Mitsubishi Motors Corporation (MMC), which will focus on producing Xev-type vehicles from the Xpander and Pajero Sport models.
This step is in line with Indonesia’s efforts to become a global player in the era of motor vehicle electrification in the Southeast Asia or ASEAN region, because it has the availability of raw material for electric vehicles in the form of nickel. In addition, the country’s population of 270 million people is also a potential for the advancement of the electric vehicle acceleration program. No wonder the Indonesian government targets to only sell electric vehicles in 2050.
Coordinating Minister for the Economy Airlangga Hartarto said he believed that the demand for electric vehicles, both for four-wheeled and two-wheeled vehicles, would continue to increase in Indonesia and the ASEAN region. It was further stated that the additional investment disbursed by TMC was Rp. 27.1 trillion. This is a continuation of the company’s commitment that has been made of Rp. 14 trillion since 2019 for business expansion and development.
Meanwhile, the remaining Rp 10 trillion will be given by MMC for business development in Indonesia. This fund is a continuation of the commitments that have been made by the company until the end of 2021 amounting to Rp. 11.3 trillion. After 2023, MMC will focus on producing the Xev type model, which consists of the Xpander and Pajero Sport models. In addition, MMC will also produce two new vehicle models of Electri Vehicle (EV) starting in 2024.
TMC Vice Chairman, Shigeru Hayakawa said that with this large investment, it is hoped that the Indonesian government will be more serious in working on electric-based motorized vehicles.
On the other hand, the Indonesian government has also succeeded in capturing large investments from several large-scale industries from Japan, such as Sojitz Corp in the methanol project, Mitsubhisi Corp in the polyester film, Toyota Shusho in the management sector, to Inpex Corp in the oil and gas sector.
Based on the records of the Ministry of Investment/BKPM, the realization of investment from Japan in Indonesia from 2017 to June 2022 reached US$20.86 billion or equivalent to Rp. 312 trillion and was ranked second in the country of origin of investment to Indonesia.
During the 2019-2022 period, countries in Southeast Asia have received foreign direct investment or foreign direct investment for the development of the electric vehicle industry amounting to US$25.57 billion. This was reported by the ASEAN Secretariat in the ASEAN Investment Report released in September 2022. The report explains, despite the pandemic, automotive industry investors in ASEAN remain active, especially in the electric vehicle supply chain.
Meanwhile, during 2019-2022, the flow of foreign investment for the electric vehicle industry in the ASEAN region, mostly entered Indonesia, with a total value of 17.8 billion US dollars.
Next in line are Thailand, Malaysia, the Philippines and Singapore as shown in the chart. Meanwhile, other ASEAN countries, namely Myanmar, Cambodia, Laos, Vietnam and Brunei Darussalam, are not recorded to have received similar foreign investment flows.
Meanwhile, the Ministry of Investment found that four world giant companies entered the battery and electric car ecosystem. The investment strengthens the government’s plan to encourage downstream nickel and make Indonesia a world center for battery and electric car production. The four giant companies are; LG Energy Solutions, Contemporary Amperex Technology or CATL, Foxconn and British Volt.
Investment Minister Bahlil Lahadalia said that the direction of investment policy in the future is aimed at encouraging the downstream sector. There are at least two downstream concepts that will be developed by the government. The first is technology-based downstreaming to create added value. While the second is investment that is encouraged to enter the labor-intensive sector.
According to a report by a market research institute from South Korea, SNE Research, the global use of electric vehicle batteries reached 203.4 gigawatt-hour (GWh) during the first semester of 2022. This achievement increased 76.8% compared to the first semester of last year which was 115.1 GWh.
SNE Research also reported that the largest global electric vehicle battery manufacturer in this period was Contemporary Amperex Technology or known as CATL. Indonesia has succeeded in attracting investors to cooperate in Indonesia, this is of course good news, because with investment, the economy will increase and the workforce will be more and more absorbed.
)* The author is a contributor to the Nusantara Reading Room
