November 18, 2022
JAKARTA – Indonesia has attracted new investment into the electric vehicle (EV) sector, coinciding with the Group of G20 forum, where global leaders and businesses agreed on commitments to lower carbon emissions.
Indonesia Investment Authority (INA), Contemporary Amperex Technology Co. Ltd. (CATL) and CMB International Capital Corporation Ltd. (CMBI) signed a memorandum of understanding (MoU) on Monday to establish a Green Fund, which they will jointly invest in.
The fund, which is expected to grow up to US$2 billion, will focus on EV value chain investment primarily in Indonesia from downstream to upstream.
“Electrification is an attractive solution for conventional energy in helping to reduce the environmental impact while also tapping into a potential growth market,” INA CEO Ridha Wirakusumah said in a statement.
In addition, Chinese conglomerate Envision Energy is set to enter Indonesia’s EV battery industry, particularly in the area of raw materials, the Investment Ministry said on Wednesday.
“This is will be other collaboration with national companies,” Investment Minister Bahlil Lahadalia told reporters in Bali, adding that it would bring the country closer to becoming one of the world’s most prominent EV battery players.
Read also: B20 wraps up with deals on green energy, EV
Apart from the investments, existing EV producers have showcased their products by providing free services in electric buses, cars and two-wheelers.
Indonesia possesses roughly a quarter of the world’s nickel reserves amounting 21 million tonnes on a par with Australia that holds the same amount, followed by Brazil and Russia, according to the United States Geological Survey (USGS).
Indonesia is expected to emerge as a global nickel hub with nearly half of the globe’s refined nickel to be supplied by Indonesia by 2030.
The fund and the Chinese firm added to a long list of investments drawn to Indonesia, as more businesses sought to harness the country’s EV ecosystem potential, along with Foxconn and Hyundai, among many others.
State-Owned Enterprises (SOEs) Minister Erick Thohir lauded the recent INA cooperation with several investors.
He added that SOEs too have caught the opportunity by forming Indonesia Battery Corporation (IBC), a joint venture from four mining and energy state-run firms, that focuses on developing the country’s EV ecosystem.
Abrar Aulia, an analyst for the textile, automotive and steel industries at state-owned lender Bank Mandiri expects the recent INA investment may enable flow of affordable financing to support Indonesia EV industry.
He added that trend on EV adoption in Indonesia would continue to increase, which was a good sign for investors entering the market.
“We opine the trajectory of the adoption will depend on competition among EV makers. If there is more producers could sell EV with much affordable price, then it will be much faster,” Abrar told The Jakarta Post.
Read also: Jokowi orders EV switch to boost demand
M. Faisal, executive director of Center of Reform on Economics (CORE), said on Thursday that the investments would mean more players have entered the market, which he expected to greatly help in boosting Indonesia’s EV ecosystem.
However, Faisal said the fund co-founded by INA could be utilized to boost the country’s EV infrastructure, especially in the form of charging stations, which currently is still concentrated in Jakarta and Bali, whereas to maximize EV adoption, it would have to be abundant in many other regions as well. This applies too for further private investment.
Moreover, the fund could be used to help promote use of renewable energy in EV supply chain, as most of Indonesia power generation came from fossil fuels. Other opportunities, he said, might include investments to promote green mining practices, of which activists criticized over endangering environments and societies around it.