July 31, 2023
JAKARTA – President Joko “Jokowi” Widodo’s two-day visit to China has resulted in billions of dollars in investment pledges, the government has said, with the single biggest commitment a US$11.5 billion project to develop the domestic glass industry.
Investment Minister Bahlil Lahadalia told The Jakarta Post on Friday, the day the President returned, that Xinyi Group, a Chinese glass producer, had committed the funds to develop a downstream industry for quartz sand, which Indonesia has in abundance.
He said separately in an online press briefing that Xinyi would build a glass and solar panel manufacturing facility in Rempang Island, Batam, and that 95 percent of the facility’s output would be for export.
“The best thing since sliced bread is that today Bapak President witnessed the signing of a memorandum of understanding between the Indonesian government and a company called Xinyi,” Bahlil said on Friday.
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Xinyi holds 26 percent of the global glass market, Bahlil said, adding that Indonesia’s major quartz and silica reserves could offer huge potential for the company.
He estimated that the deal would create some 35,000 jobs in Indonesia.
Xinyi previously invested some $700 million to build a glass factory in the Java Integrated Industrial and Port Estate (JIIPE), a special economic zone in Gresik, East Java.
Beijing and Jakarta have also reached an agreement on developing the Kalimantan Industrial Park Indonesia (KIPI) in North Kalimantan, with a particular focus on petrochemicals and the electric vehicle (EV) industry. The government hopes to power the industrial park with renewable energy from a hydroelectric plant on the Kayan river.
“Comprehensive construction has been planned. It will start in December of this year or January of next year,” said Bahlil.
Center of Economic and Law Studies (CELIOS) director for Indonesia-China research Muhammad Zulfikar Rakhmat told the Post that he supported China’s contribution to Indonesia’s energy transition.
However, he said some Chinese investments had neglected environmental and social concerns, particularly in the nickel industry.
“It is regrettable that environmental and social issues have never been discussed in the meetings between China and Indonesia,” said Zulfikar.
Asked whether the new investments would benefit Indonesia, he said it would depend on the exports and the jobs that the companies could create in Indonesia.
Foreign Minister Retno Marsudi claimed in the same briefing that the $11.5 billion glass investment deal was just one of many commitments that Indonesia had secured in the two-day visit, adding that billions of dollars of investment had yet to be announced.
“Going forward, investment priorities are in renewables, downstream industry, health, research for food security as well as the construction of the Nusantara Capital City [IKN],” Retno said.
In the course of the two-day visit, President Jokowi met with Chinese President Xi Jinping on Thursday and with Chinese business representatives and the Indonesian Chamber of Commerce in China (INACHAM) on Friday.
At the Friday meeting, Jokowi made a pitch for investment in the EV supply chain, renewable energy and the new capital project.
He also asked Chinese investors not to hesitate to invest in Indonesia, saying the government would help them address business challenges they faced in the process.
“If you face any problems in the field, whether in land clearing or permits, please deliver it [to us]. […] We will accommodate and resolve all of the information you provide,” the President said.
He added that Indonesia had created policies to support its green economy drive, noting that if businesses in Indonesia could meet the proper standards, they could produce “premium products” with higher value on the global market.
Prior to the trip, Coordinating Maritime Affairs and Investment Minister Luhut Pandjaitan said on Tuesday that Indonesia was finalizing incentives for EV manufacturers in the country and was hoping to secure investments from major companies like BYD and Tesla.
He said he planned to meet BYD executives in Chengdu, China, on Thursday to follow up on discussions of investment in Indonesia.
It remains to be seen if BYD will be among the additional sources of investment that minister Retno referenced.