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Indonesia Strengthens Cooperation to Encourage Green Investment

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By: Made Raditya )*

Investment presence is one of the efforts to improve the economy in Indonesia, but more than that, the Indonesian government wants green investment that will have a good impact not only on improving the economy, but also on efforts to reduce carbon emissions.

The Government of Indonesia is collaborating with the Government of South Korea in encouraging an increase in sustainable green investment through a memorandum of cooperation between the Ministry of Investment/Investment Coordinating Agency (BKPM) and the Ministry of Trade, Industry and Energy or the Ministry of Trade, Industry and Energy (MOTIE).

Minister of Investment/Head of BKPM Bahlil Lahadalia and Minister of MOTIE Lee Chang-Yang signed the memorandum of cooperation in Seoul, South Korea, witnessed by President Joko Widodo and President of South Korea Yoon Seok Yeol.

The collaboration between the two governments is carried out to enhance and facilitate mutually beneficial cooperation activities, such as investment, technology transfer and capacity building to accelerate the realization of sustainable green investment. Bahlil is optimistic that this collaboration will accelerate the growth of sustainable green investment in Indonesia. He conveyed that Indonesia and South Korea already have very good bilateral relations, especially regarding investment.

Bahlil said that his party is committed to consistently providing full support to South Korean investors from the start of licensing to supervision to the realization of investment. This already applies to potential investors as well as those who already exist in Indonesia at this time. Bahlil also invited potential investors from South Korea to come to Indonesia with capital and technology. The Indonesian government is also ready to facilitate this.

Cooperation with South Korea is certainly not without reason, considering that investors from South Korea have made a significant contribution to Indonesia in realizing economic transformation. One of them is manifested in the development of the electric vehicle ecosystem in Indonesia.

MOTIE will facilitate investment from South Korea which has the capital and cutting-edge technology to develop sustainable green investments, as well as provide appropriate technological support for transfer to the Indonesian government and the private sector. Minister Motie Lee Chang Yang welcomed the establishment of cooperation with the Ministry of Investment / BKPM.

Lee said he was optimistic that the existing and future cooperation would be able to have a positive impact on both parties, especially in the investment sector. On this occasion, Lee was very grateful to the Indonesian Minister of Investment for the support and facilitation given to investors from South Korea so far.

Lee admitted that he was happy because he could contribute to the development of green investment in Indonesia and he also hoped that this cooperative relationship could continue and be mutually beneficial.

In addition to developing and transferring technology in sustainable green investment. The Memorandum of Cooperation between the Ministry of Investment/BKPM and MOTIE also includes the exchange of investment opportunities and relevant policies on the development of green investment. At the same time promoting and facilitating investment cooperation activities engaged in the industrial and green energy sectors, such as the battery electric vehicle ecosystem, semi-conductor and renewable energy.

Sustainable green investment in the form of developing an electric vehicle ecosystem from South Korea in Indonesia is realized through cooperation between a consortium of South Korean companies. These include LG, Hyundai, KIA and Posco with the Indonesian BUMN IBC (Indonesia Battery Corporation).

This collaboration includes the development of an integrated electric battery industry starting from nickel mining and smelting (smelter) located in Halmahera, North Maluku to the refining industry (refinery), precursor and cathode industries, as well as the expansion of the battery cell industry to be built at KIT Batang, Java. Central, to the electric battery recycling industry, with a total investment plan of IDR 142 trillion. The implementation of the first stage of groundbreaking for the construction of an electric vehicle battery cell factory was carried out in Karawang, West Java on September 15, 2021.

Currently, the construction has entered the construction stage, which has realized 50 to 60 percent of the total target production capacity of 10 gigawatt with an investment of US$1.1 billion. On June 8, 2022, the construction of the second phase of the integrated electric battery industry has also begun at KIT Batang, Central Java.

In addition, in the development of an electric vehicle production plant, Hyundai has also realized its investment which reached a value of 1.5 billion US dollars in Cikarang, Bekasi Regency, West Java which has been in production since January 2022 with a production capacity of 150 thousand units per year.

The Indonesian government has never been half-hearted in facilitating green investment cooperation efforts, this is because green investment is believed to make Indonesia move out of the title of developing country and turn into a developed country.

)* The author is a contributor to the Press Circle and Cikini Students

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