Indonesia’s Industrial Export Ambitions

[Indos]

Indonesia’s Industrial Export Ambitions​

President Joko Widodo has overseen a centralization of research, development, and industrial production.

By James Guild
November 01, 2022

In June 2022, the Department of National Defense of the Philippines awarded a contract for two landing platform docks (LPDs) to Indonesia’s state-owned naval yard, PT PAL. This is the second time the Philippines has ordered a pair of LPDs from PAL, so it appears they were satisfied with the first batch. PAL originally acquired the ability to build these amphibious landing craft from a Korean partner as part of a purchase and technology transfer deal back in the 2000s.

Ships are not the only industrial product Indonesia is exporting to the Philippines. A subsidiary of PT Len, the state-owned electronics and technology company, inked a contract to provide signaling systems for the Philippines National Railways earlier this year. The Philippines is currently in the midst of a massive railway investment boom, and Indonesia’s state-owned industrial companies are looking to capitalize on that.

Railway systems and infrastructure have been a particularly strategic component of Indonesia’s industrial export ambitions. State-owned INKA, which produces rolling stock for both the domestic and export markets, has big plans to expand its footprint in Africa and around the region. They have had some success, including closing a deal to export 262 freight carriages to New Zealand. But they are still far from being the regional powerhouse they one day hope to be.

Indonesia has long sought to position itself as an industrial export hub. These ambitions were typified by former President B. J. Habibie, who as minister of research and technology oversaw a cluster of state-owned industrial companies that tried to jump-start high-tech manufacturing like aerospace. Nowadays, those efforts are generally thought of as wasteful examples of government largess that failed to achieve their objectives.

But companies like INKA, PT Len, and PT PAL are legacies of Habibie’s original techno-developmentalist vision. And under current President Joko Widodo, there has been a renewed push to integrate them in a centralized fashion and better coordinate research and development, operations, and diplomatic outreach to boost strategic industrial exports like ships, rolling stock, and signaling systems.

That was the logic behind centralizing research and development at the national level with BRIN (the National Research and Innovation Agency). It is also the logic behind the recent merger of five state-owned defense companies under PT Len. The idea is that by centralizing R&D and production, the state can streamline these functions and direct them more effectively toward nationally strategic goals, such as securing a larger share of industrial export markets.

Questions remain, however. For one, is the state really the best agent to coordinate technological development, and can innovation thrive in a centralized bureaucratic environment? Another pressing question is whether Indonesia’s industrial SOEs are capable of meeting the technical challenges. These issues were neatly illustrated by the Black Eagle program, a consortium of Indonesian stakeholders tasked with indigenously developing a medium altitude long-range drone. The project was recently shelved as the technical (and perhaps organizational) challenges become increasingly acute.

Can the centralization of research and development and industrial production overcome these obstacles going forward? We have to wait and see. I think an important determinant of future success is going to be the extent of foreign collaboration. PT PAL had success partnering with foreign companies willing to transfer technology, skills, and knowledge. That’s how they acquired the ability to produce LPDs for export. And there is a good chance the AUKUS deal will make French companies like Thales more willing to transfer technology to strategic partners in the region, like Indonesia.

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Ultimately, such decisions and the negotiations behind them are as much about politics as they are about R&D and production. So there is an argument to be made that for strategic technology-intensive sectors, like defense manufacturing or industrial production aimed at export markets, the state might be a more appropriate agent of development than the private sector and market forces. It will take many years before we can start to measure the outcomes here, but the lines are starting to be drawn as the Indonesian state looks to again take a central role in reviving the country’s industrial export ambitions.

AUTHORS

GUEST AUTHOR​

James Guild​

James Guild is an expert in trade, finance, and economic development in Southeast Asia.

Indonesia’s Industrial Export Ambitions

President Joko Widodo has overseen a centralization of research, development, and industrial production.

thediplomat.com

 

[Indos]

Barata Strengthens Export Market of Foundry Products to Australia​

Story from Lida Puspaningtyas • Feb 10 2023


REPUBLIKA.CO.ID, JAKARTA -- PT Barata Indonesia (Persero) continues to strengthen the export market for its flagship products. This time Barata Indonesia is trying to strengthen the export market for foundry products to Australia.

Deputy Minister of SOEs Kartika Wirjoatmodjo (third left) with President Director of PT VKTR Teknologi Mobility Gilarsi W Setijono (center), Marketing Director of PT Barata Indonesia (Persero) Sulistyo Handoko (third right), Director of Finance, HR, and Risk Management of PT INKA (Persero) Andy Budiman (second right), and Director of PT PPA (Persero) Yadi Jaya Ruchandi (second left) reviewed the straight pipe chemical product after signing the Head of Agreement (HoA) in Gresik, East Java, Thursday (15/9/2022). PT INKA, PT VKTR and PT Barata Indonesia agreed to collaborate in developing automotive components, especially for electric vehicles in order to create an electrification ecosystem for public transportation in Indonesia.© ANTARA/Rizal Hanafi


The management of Barata Indonesia, represented by President Director Bobby Sumardiat Atmosudirjo and Marketing Director Sulistyo Handoko, has conducted face-to-face meetings with Standart Car Truck (SCT) a Wabtec Subsidiary Company, to strengthen the export of Barata Indonesia foundry products to Australia.

SCT is a company from the United States that for 22 years has been a business partner of Bogie products, supporting the basic frame of the railway body, from Barata Indonesia. President Director of Barata Indonesia Bobby Sumardiat Atmosudirjo said the company always strives to open new market opportunities and strengthen existing export markets abroad.

"In addition to increasing product competitiveness, the strengthening of the export market to Australia is carried out to maximize the production capacity of the Barata Indonesia foundry," Bobby said in a written statement in Jakarta, Friday (10/2/2023).

Bobby said that the company had previously exported foundry products to Australia in 2011-2012. This time, Barata Indonesia projects exports of 273 car sets each year. Bobby assessed that strengthening the existing export market can be done consistently by producing quality products.

"Therefore, we will continue to maintain the quality of our foundry products, by continuing to meet the necessary export quality standards so that we can produce quality and competitive products," bobby said.

Bobby added that Barata Indonesia, which was established in 1971 so far, has indeed supplied railway components for domestic and export needs. To meet export quality standards, Bobby continued, the foundry factory owned by Barata Indonesia has bagged an Association of America Railroads (AAR) certificate as a condition to be able to penetrate the export market to the United States and Canada.

MSN

 

[Indos]

INKA Group Exports Batch 1 Freight Wagons to New Zealand​

The story of Fuji Pratiwi • 1 hour ago




Freight train (illustration). INKA Group as a state-owned integrated railway and land transportation manufacturing company in Indonesia exported 133 units of flat top container (CFT) wagon freight cars to KiwiRail, New Zealand.© AP Photo



REPUBLIKA.CO.ID, MADIUN -- INKA Group as a state-owned integrated railway and land transportation manufacturing company in Indonesia exported 133 units of container flat top (CFT) wagon freight cars to KiwiRail, New Zealand.

President Director of PT INKA (Persero) Eko Purwanto said, the freight cars exported this time are / batch 1 of the project of 262 units of carriages obtained.

"A total of 133 units of these freight cars are part of a project of 262 units of carriages obtained from an Australian company, UGL, in January 2021. Two prototype units of this project have been delivered in mid-2022 and have completed the dynamic test stage by UGL and KiwiRail," said Eko Purwanto in Madiun, East Java, Thursday (23/2/2023).

According to Eko, INKA Group also obtained a contract from UGL for the procurement of 450 wagons in September 2022 and a contract for 50 locomotive platforms/underframes in November 2021.

"We're certainly proud. The relationship with UGL proves INKA's ability to compete in the global arena and hopes that this collaboration can be sustainable considering the open need for facilities there," said Eko.

KiwiRail's Director of Rollingstock Procurement Programme, Chrissy Farago, said the new carriages would replace the old freight cars as a form of operational modernisation programme for KiwiRail's fleet. "When testing is complete, these new carriages will be immediately placed and used for timber transport as one of KiwiRail's services to the forestry industry in New Zealand," said Chrissy Farago.

The general specifications of the carriage are divided into three types, namely the size of 40 ft, 50 ft, and 60 ft designed by UGL in Newcastle Australia with an empty weight of about 15.2 tons-17.1 tons with a maximum carrying capacity of 62.9 tons.

Meanwhile, KiwiRail is a government-owned company in New Zealand that operates as a rail transport operator. KiwiRail is also New Zealand's largest inter-island ferry operator.

Supplying 262 freight cars to New Zealand is expected to be a major step for INKA Group to re-take a role in the Oceania railway market.

MSN

 

[Indos]

Jump-starting Indonesia’s transition to an innovative economy​

24 February 2023
Authors: Bryan Mercurio and Ronald Tundang, CUHK

Indonesia has vast potential. Despite numerous setbacks since its independence in 1945 — including the 1997 Asian financial crisis — the country is now the largest Southeast Asian economy and a member of the G20. Traditionally an agrarian economy, Indonesia is transitioning towards more services and manufacturing employment.

These efforts have been promoted by strong government intervention. Indonesia actively pursues industrial policies to increase the capacity of its enterprises, which are mainly state owned, in order to compete with foreign firms in the global value chain. To achieve high-income status, Indonesia has to be more competitive, as it only ranked 50th out of 141 countries in 2019.

The odds of middle-income countries reaching high-income status are small. Only 16 developing economies leaped to high-income status between 1960 and 2014 and many did so through good fortune or by joining the European Union. Other successful economies, notably South Korea, Japan and Singapore, did so by embracing an export-powered and innovative economy. In each jurisdiction, the state intervened to address market failure or boost domestic firms in selected industries to flourish.

In Indonesia, the government is the main contributor to research and development (R&D), with the private sector only accounting for around 20 per cent of spending. In 2021, Indonesia centralised R&D under the National Research and Innovation Agency, which mimics the Singaporean model.

Indonesia can learn from its failures, such as when it attempted to jump-start innovative industries by forming high-tech industrial clusters like the aircraft industry. It failed because there was no domestic industrial base to provide raw materials such as steel and aluminium. This contrasts with South Korea which has successfully built comprehensive high-tech industries from upstream to downstream.

The Indonesian government now seems serious about investing in and enhancing innovation as a means of economic development. But its strategies are missing a critical component — intellectual property (IP). The government has yet to realise that IP is instrumental to the promotion of innovative capacity and an essential component of sustainable economic growth.

The Industrial Revolution illustrates the preeminence of Western countries in lifting humanity out of its Malthusian trap since the nature of invention was democratised, allowing anyone who produced new ideas capable of commercial and industrial application to be protected by IP rights. Of course, the rate of invention is not always proportional to the size of the population as governments must nurture innovative capabilities.

This has not always been the case for Indonesia. Its huge population and strong central government can be liabilities as public spending is often focussed on social welfare, not education or individual advancement. Indonesia has the lowest R&D and tertiary education spending among G20 countries. For this reason, its innovative capabilities are lagging behind world development. Since 2016, 2912 overseas patents registered under the Patent Cooperation Treaty have been granted in Indonesia, while only 751 Indonesian patents have been granted.

Indonesia’s industrial policy in the last decade has focussed on promoting non-tariff measures such as local content requirements as well as tax incentives to direct investment downstream across various sectors, from mining to manufacturing.

The success of such an approach is questionable as the policies have not yet boosted the global competitiveness of these industries. The manufacturing sector still depends on domestic demand and only a few products make up the most significant exports.

It is time for Indonesia to rethink its priorities and industrial policy to embrace the notion of an innovative economy. Knowledge accumulation through higher education and targeted skill acquisition will allow the country to jump over the learning curve. In this way, Indonesia can access ideas and foreign technologies before further improving on them in the same way the early-industrialising Asian economies did in the 1960s–90s.

To do so, Indonesia must get the mix of policy initiatives right. The impetus should be about encouraging innovation and invention in ways that will justify more robust IP protection.
The pharmaceutical industry would be a beneficiary of a new and revitalised innovative economy.

Indonesia is keen to become a regional pharmaceutical hub, but the transformation will not be easy. North American and European firms dominate the pharmaceutical patent landscape, while Chinese and Indian firms manufacture cheap generic brands under licence. Indonesia desires to be an innovator and a low-cost manufacturer, yet it also seeks to assist downstream interests by requiring local content requirements to facilitate sales to the government.

Becoming an innovator will be difficult without careful planning and policy development as the country lacks a strong industrial base and currently has low levels of R&D. Competing as a manufacturer will also take time as producers must find ways to cut costs and develop the raw materials industry. Indonesia must ensure that its IP framework is optimal and allows the country to leverage, leapfrog and progress in both developing new drugs and becoming a trusted licensee for manufacturing.

Indonesia’s growth prospects will not advance without a stronger culture of innovation. The country must shift the priorities of its industrial policy and create an integrated system that encourages and promotes innovation and invention. The first step is to develop a strong upstream industrial base and subsequently develop downstream industries.


Ronald Tundang is a PhD Candidate at The Chinese University of Hong Kong.
Bryan Mercurio is the Simon F.S. Li Professor of Law at The Chinese University of Hong Kong.
This research is supported by the Hong Kong RGC Senior Research Fellow Scheme 2022/23 for a project entitled: Access to Vaccines in a Post-COVID-19 World: Sustainable Legal and Policy Options (Project No. SRFS2223-4H01). The views expressed in this publication do not necessarily represent the views of others involved in the project.

Jump-starting Indonesia’s transition to an innovative economy

To achieve high-income status, Indonesia must rethink industrial policy and embrace the notion of an innovative economy.

www.eastasiaforum.org

 

[Indos]

​

Indonesia can learn from its failures, such as when it attempted to jump-start innovative industries by forming high-tech industrial clusters like the aircraft industry. It failed because there was no domestic industrial base to provide raw materials such as steel and aluminium. This contrasts with South Korea which has successfully built comprehensive high-tech industries from upstream to downstream.

Why do you say it failed ? It still running AlhamduliLLAH

Steel ?

Indonesia’s Top 10 Exports​

The following export product groups represent the highest dollar value in Indonesian global shipments during 2021. Also shown is the percentage share each export category represents in terms of overall exports from Indonesia.

1. Mineral fuels including oil: US$45.1 billion (19.8% of total exports)
2. Animal/vegetable fats, oils, waxes: $32.8 billion (14.4%)
3. Iron, steel: $20.9 billion (9.2%)
4. Vehicles: $8.6 billion (3.8%)
5. Electrical machinery, equipment: $8.5 billion (3.7%)
6. Rubber, rubber articles: $7.1 billion (3.1%)
7. Other chemical goods: $6.9 billion (3%)
8. Ores, slag, ash: $6.4 billion (2.8%)
9. Machinery including computers: $6.3 billion (2.8%)
10. Footwear: $6.2 billion (2.7%)

Indonesia’s Top Exports 2023

Indonesia’s top exports in 2023 a searchable database of 100 most valuable Indonesian exported goods plus trade balances by major products

www.worldstopexports.com

For Alluminium there is Inalum and PT Indonesia Alluminium Alloy

 

[Sapei]

Best of luck, Indonesia. the future is really looking bright for you. Hopefully, Tesla will announce a Gigafactory soon.

 

[Indos]

Indonesia’s nickel riches spur local company EV, battery ambition​

Visitors examine a Wuling Air electric vehicle, right, at the Gaikindo Indonesia International Auto Show in Tangerang, Indonesia, on August 18, 2022 © Bloomberg


Erwida Maulia and Ismi Damayanti, Nikkei staff writers


FEBRUARY 13 2023


From coal miners to conglomerates, Indonesia’s burgeoning electric vehicle and battery scene is attracting broad local corporate interest buoyed by the country’s rich nickel resources and government promises of incentives.

The involvement comes as global EV makers including China’s BYD and Tesla of the US have either signed or are “finalising” deals to invest in Indonesia, Luhut Pandjaitan, co-ordinating minister for maritime affairs and investment, told a briefing of Indonesian regional leaders last month.

Companies hope to ride on the government’s push to utilise the country’s nickel reserves to develop a battery industry, enter the global EV supply chain and develop a manufacturing base. With a population of more than 270mn, Indonesia also offers a potentially huge market.

But formidable challenges to individual, public and business adoption include consumer affordability, lack of public charging infrastructure and corporate governance questions over potential conflicts of interest arising from close relations among government officials, politicians and companies.

The Indonesia Morowali Industrial Park on Sulawesi island hosts dozens of nickel smelters, including for battery materials © Dimas Ardian


Among the most aggressive entrants so far is family-controlled Bakrie & Brothers, a conglomerate with interests spanning energy, infrastructure and telecommunications. It supplied dozens of BYD’s electric buses to the TransJakarta public bus system last year through subsidiary VKTR Teknologi Mobilitas and is seeking more deals.

“For 80 years, Bakrie & Brothers has focused on steel, infrastructure and other [areas],” Anindya Bakrie, company president, said at a public event in December. He added that the next three areas the company would focus on are electrification, renewable energy and digitalisation.

Indonesia is the world’s biggest producer of nickel, a key component in long-range EV batteries. Dozens of battery-related projects are under construction — mainly on nickel-rich Sulawesi and Halmahera islands, including ones led by Chinese battery giant Contemporary Amperex Technology (CATL) and its South Korean rival LG Energy Solution.

Some local companies are building smelters to process nickel ore into feedstock for battery production. Others are focusing on manufacturing and/or distribution of e-scooters and commercial EVs such as buses and trucks, as electric cars remain largely unaffordable for most Indonesians. Still others are installing charging or battery swap stations. And many are collaborating with foreign companies to catch up on technology and aid financing.

Besides Bakrie, other so-called old economy companies sense an opportunity. Major coal miners such as Indika Energy, Adaro Energy and TBS Energi Utama, armed with record profits from soaring coal prices over the past two years, see the EV sector as a way to diversify amid rising climate pressures.

Indika, through subsidiary Ilectra Motor Group, announced a partnership in January with Damon Motors to domestically distribute the Canadian electric motorbike start-up’s products. That follows Ilectra’s launch last year of e-scooter brand Alva One, while Indika formed a joint venture with Taiwanese tech group Foxconn — Foxconn Indika Motor — with initial plans to domestically manufacture batteries and electric buses.

TBS last year formed Electrum, a joint venture with Indonesian ride-hailing giant Gojek to supply 2mn e-scooters for Gojek drivers this decade. Electrum is partnering with Taiwanese e-scooter maker Gogoro and the Indonesian state-owned manufacturer of Gesits e-scooters for the procurement, but is also planning to build its own production facility this year.

Adaro, meanwhile, has set up battery subsidiary Adaro Baterai Indonesia and is building a $2bn aluminium smelter and supporting facilities on Borneo island, with the first phase expected to finish in 2025.

Indonesian state oil company Pertamina has installed charging stations for EVs at some of its gasoline stations on the islands of Java and Bali © Erwida Maulia


A key hurdle to EV uptake is lack of public charging infrastructure. Some companies are moving to fill the void.

Singapore-based EV start-up ION Mobility, in which GDP Venture — the venture capital arm of major conglomerate Djarum Group, owned by Indonesia’s richest men, the Hartono brothers — participated in seed funding, is preparing battery pack and e-scooter production in Indonesia. It also plans to install at least 100 charging stations in partnership with Indonesian state utility Perusahaan Listrik Negara (PLN).

Property majors are also enthusiastic. Sinarmas Land — the property arm of Sinar Mas Group, controlled by the Widjaja family — is looking to integrate electric buses as part of smart city features under development in its flagship suburban Jakarta township projects. John Riady, executive director of Lippo Group, focused on property and hospitals, told Nikkei Asia in November it is looking to invest in renewable energy and EVs — “probably doing that in partnership with entrepreneurs”.

Private sector participation adds to initiatives led by state-owned enterprises including oil and gas giant Pertamina, PLN, miner Aneka Tambang and mining holding company MIND ID. The four established the Indonesia Battery in 2021, which separately partners with CATL and LG Energy Solution to develop an “end-to-end lithium battery supply chain”.

Pandjaitan, the chief investment minister, said on February 2 that Indonesia could start producing lithium-ion batteries as early as 2024, adding to his statement last month that the country in 2027 “might become one of the world’s three largest producers” of those batteries.
Analysts see positives and negatives in those EV ambitions.

“Indonesia has a significant advantage when it comes to EV adoption,” Vivek Lath, a partner at consultancy McKinsey in Singapore, told Nikkei Asia in December, citing its nickel holdings and battery-related projects. “We expect a significant uptake in Indonesia going forward. And this is across the EV value chain.” McKinsey in an October note said Indonesia’s revenue pool from that chain is projected to reach nearly $50bn by 2035.

Hyundai Motor Ioniq 5 electric vehicles being made at a Hyundai plant in Cikarang, Indonesia. The South Korean automaker is among foreign manufacturers that see promise in the country © Bloomberg


The government is also preparing incentives, including subsidies, and is targeting increasing electric car sales to 20 per cent of total car sales in 2025. Indonesia’s electric car sales shot to over 10,000 vehicles last year, from around 600 in 2021, according to wholesale data from the Association of Indonesia Automotive Industries, or Gaikindo. More than a million gasoline cars were sold the same year.

“These incentives will be given based on calculations and studies [into similar policies] in other countries, mainly [in] Europe,” Indonesian President Joko Widodo said in December. “We’ll reveal [them] after we finalise the calculations.”

Pandjaitan said the planned incentives, soon to be announced, include an approximately 7mn rupiah ($470) subsidy for each e-scooter purchase.

Indonesian ride-hailing company Gojek showed off its e-scooter fleet during the G-20 summit on Bali in November © Erwida Maulia


But the plan has stirred controversy, with critics arguing subsidies should be directed to the poor rather than helping people with money to buy electric cars. And concerns over potential conflicts of interest have sparked scrutiny into corporate-political relationships.

Among government officials and politicians affiliated with local companies getting into EV and battery businesses are Pandjaitan, whose family owns a stake in TBS, and Moeldoko, the presidential chief of staff, who runs electric bus company Mobil Anak Bangsa Indonesia, which is looking to supply government offices and SOEs. He also chairs the Indonesian EV Industry Association.

Septian Hario Seto, Pandjaitan’s deputy, told Nikkei that the co-ordinating minister now owns just 9.9 per cent of investment firm Toba Sejahtra, which has a minority stake in TBS, and that none of Toba’s executives or commissioners are involved in either TBS or Electrum. Pandjaitan “is actually in the process of selling his stake [in Toba]. He’s looking for a buyer,” Seto said.

A spokesperson at Moeldoko’s office overseeing transportation had not responded to Nikkei’s requests for comment by publication time. But Moeldoko, answering critics, told local news outlet detikX in October that the planned incentives would not benefit just certain groups of people, but “offer opportunities for the private sector” overall by providing “market certainty”.

Andry Satrio Nugroho, an analyst at the Institute for Development of Economics and Finance, a Jakarta-based think-tank, said nickel mining and processing are dominated by companies connected to local and national politicians. Environmentalists see such links as allowing companies to get away with poor mining and industrial practices.

Nugroho calls the situation “a form of moral hazard afflicting upstream to downstream” EV-related businesses and that political interests could lead to poorly targeted subsidies that, rather than incentivising EV users, would “only actually benefit” producers and EV dealers.

A version of this article was first published by Nikkei Asia on February 3 2023. ©2023 Nikkei Inc. All rights reserved.

Indonesia’s nickel riches spur local company EV, battery ambition

Old economy conglomerates and businesses pounce as government pushes industry take-off

www.ft.com

 

[Sapei]

Indonesia’s nickel riches spur local company EV, battery ambition​

Visitors examine a Wuling Air electric vehicle, right, at the Gaikindo Indonesia International Auto Show in Tangerang, Indonesia, on August 18, 2022 © Bloomberg


Erwida Maulia and Ismi Damayanti, Nikkei staff writers


FEBRUARY 13 2023


From coal miners to conglomerates, Indonesia’s burgeoning electric vehicle and battery scene is attracting broad local corporate interest buoyed by the country’s rich nickel resources and government promises of incentives.

The involvement comes as global EV makers including China’s BYD and Tesla of the US have either signed or are “finalising” deals to invest in Indonesia, Luhut Pandjaitan, co-ordinating minister for maritime affairs and investment, told a briefing of Indonesian regional leaders last month.

Companies hope to ride on the government’s push to utilise the country’s nickel reserves to develop a battery industry, enter the global EV supply chain and develop a manufacturing base. With a population of more than 270mn, Indonesia also offers a potentially huge market.

But formidable challenges to individual, public and business adoption include consumer affordability, lack of public charging infrastructure and corporate governance questions over potential conflicts of interest arising from close relations among government officials, politicians and companies.

The Indonesia Morowali Industrial Park on Sulawesi island hosts dozens of nickel smelters, including for battery materials © Dimas Ardian


Among the most aggressive entrants so far is family-controlled Bakrie & Brothers, a conglomerate with interests spanning energy, infrastructure and telecommunications. It supplied dozens of BYD’s electric buses to the TransJakarta public bus system last year through subsidiary VKTR Teknologi Mobilitas and is seeking more deals.

“For 80 years, Bakrie & Brothers has focused on steel, infrastructure and other [areas],” Anindya Bakrie, company president, said at a public event in December. He added that the next three areas the company would focus on are electrification, renewable energy and digitalisation.

Indonesia is the world’s biggest producer of nickel, a key component in long-range EV batteries. Dozens of battery-related projects are under construction — mainly on nickel-rich Sulawesi and Halmahera islands, including ones led by Chinese battery giant Contemporary Amperex Technology (CATL) and its South Korean rival LG Energy Solution.

Some local companies are building smelters to process nickel ore into feedstock for battery production. Others are focusing on manufacturing and/or distribution of e-scooters and commercial EVs such as buses and trucks, as electric cars remain largely unaffordable for most Indonesians. Still others are installing charging or battery swap stations. And many are collaborating with foreign companies to catch up on technology and aid financing.

Besides Bakrie, other so-called old economy companies sense an opportunity. Major coal miners such as Indika Energy, Adaro Energy and TBS Energi Utama, armed with record profits from soaring coal prices over the past two years, see the EV sector as a way to diversify amid rising climate pressures.

Indika, through subsidiary Ilectra Motor Group, announced a partnership in January with Damon Motors to domestically distribute the Canadian electric motorbike start-up’s products. That follows Ilectra’s launch last year of e-scooter brand Alva One, while Indika formed a joint venture with Taiwanese tech group Foxconn — Foxconn Indika Motor — with initial plans to domestically manufacture batteries and electric buses.

TBS last year formed Electrum, a joint venture with Indonesian ride-hailing giant Gojek to supply 2mn e-scooters for Gojek drivers this decade. Electrum is partnering with Taiwanese e-scooter maker Gogoro and the Indonesian state-owned manufacturer of Gesits e-scooters for the procurement, but is also planning to build its own production facility this year.

Adaro, meanwhile, has set up battery subsidiary Adaro Baterai Indonesia and is building a $2bn aluminium smelter and supporting facilities on Borneo island, with the first phase expected to finish in 2025.

Indonesian state oil company Pertamina has installed charging stations for EVs at some of its gasoline stations on the islands of Java and Bali © Erwida Maulia


A key hurdle to EV uptake is lack of public charging infrastructure. Some companies are moving to fill the void.

Singapore-based EV start-up ION Mobility, in which GDP Venture — the venture capital arm of major conglomerate Djarum Group, owned by Indonesia’s richest men, the Hartono brothers — participated in seed funding, is preparing battery pack and e-scooter production in Indonesia. It also plans to install at least 100 charging stations in partnership with Indonesian state utility Perusahaan Listrik Negara (PLN).

Property majors are also enthusiastic. Sinarmas Land — the property arm of Sinar Mas Group, controlled by the Widjaja family — is looking to integrate electric buses as part of smart city features under development in its flagship suburban Jakarta township projects. John Riady, executive director of Lippo Group, focused on property and hospitals, told Nikkei Asia in November it is looking to invest in renewable energy and EVs — “probably doing that in partnership with entrepreneurs”.

Private sector participation adds to initiatives led by state-owned enterprises including oil and gas giant Pertamina, PLN, miner Aneka Tambang and mining holding company MIND ID. The four established the Indonesia Battery in 2021, which separately partners with CATL and LG Energy Solution to develop an “end-to-end lithium battery supply chain”.

Pandjaitan, the chief investment minister, said on February 2 that Indonesia could start producing lithium-ion batteries as early as 2024, adding to his statement last month that the country in 2027 “might become one of the world’s three largest producers” of those batteries.
Analysts see positives and negatives in those EV ambitions.

“Indonesia has a significant advantage when it comes to EV adoption,” Vivek Lath, a partner at consultancy McKinsey in Singapore, told Nikkei Asia in December, citing its nickel holdings and battery-related projects. “We expect a significant uptake in Indonesia going forward. And this is across the EV value chain.” McKinsey in an October note said Indonesia’s revenue pool from that chain is projected to reach nearly $50bn by 2035.

The government is also preparing incentives, including subsidies, and is targeting increasing electric car sales to 20 per cent of total car sales in 2025. Indonesia’s electric car sales shot to over 10,000 vehicles last year, from around 600 in 2021, according to wholesale data from the Association of Indonesia Automotive Industries, or Gaikindo. More than a million gasoline cars were sold the same year.

“These incentives will be given based on calculations and studies [into similar policies] in other countries, mainly [in] Europe,” Indonesian President Joko Widodo said in December. “We’ll reveal [them] after we finalise the calculations.”

Pandjaitan said the planned incentives, soon to be announced, include an approximately 7mn rupiah ($470) subsidy for each e-scooter purchase.

Indonesian ride-hailing company Gojek showed off its e-scooter fleet during the G-20 summit on Bali in November © Erwida Maulia


But the plan has stirred controversy, with critics arguing subsidies should be directed to the poor rather than helping people with money to buy electric cars. And concerns over potential conflicts of interest have sparked scrutiny into corporate-political relationships.

Among government officials and politicians affiliated with local companies getting into EV and battery businesses are Pandjaitan, whose family owns a stake in TBS, and Moeldoko, the presidential chief of staff, who runs electric bus company Mobil Anak Bangsa Indonesia, which is looking to supply government offices and SOEs. He also chairs the Indonesian EV Industry Association.

Septian Hario Seto, Pandjaitan’s deputy, told Nikkei that the co-ordinating minister now owns just 9.9 per cent of investment firm Toba Sejahtra, which has a minority stake in TBS, and that none of Toba’s executives or commissioners are involved in either TBS or Electrum. Pandjaitan “is actually in the process of selling his stake [in Toba]. He’s looking for a buyer,” Seto said.

A spokesperson at Moeldoko’s office overseeing transportation had not responded to Nikkei’s requests for comment by publication time. But Moeldoko, answering critics, told local news outlet detikX in October that the planned incentives would not benefit just certain groups of people, but “offer opportunities for the private sector” overall by providing “market certainty”.

Andry Satrio Nugroho, an analyst at the Institute for Development of Economics and Finance, a Jakarta-based think-tank, said nickel mining and processing are dominated by companies connected to local and national politicians. Environmentalists see such links as allowing companies to get away with poor mining and industrial practices.

Nugroho calls the situation “a form of moral hazard afflicting upstream to downstream” EV-related businesses and that political interests could lead to poorly targeted subsidies that, rather than incentivising EV users, would “only actually benefit” producers and EV dealers.

A version of this article was first published by Nikkei Asia on February 3 2023. ©2023 Nikkei Inc. All rights reserved.

Indonesia’s nickel riches spur local company EV, battery ambition

Old economy conglomerates and businesses pounce as government pushes industry take-off

www.ft.com

Are Indonesian companies planning to produce EV cars as well? Something like the Wuling Air?

 

[Indos]

Are Indonesian companies planning to produce EV cars as well? Something like the Wuling Air?

Most of them dont want to compete on very competitive car market, but rather EV bike like this :

Alva One : Indika Energy Group

Polytron Evo : Polytron (Electronic Company)

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Pindad has plan to make EV car

It is still in prototype phase, and will try to enter military and off road car market.

 

[Indos]

Best of luck, Indonesia. the future is really looking bright for you. Hopefully, Tesla will announce a Gigafactory soon.

Thanks, Amin, inshaAllah. We have already had Korean, Japanese, and China EV cars production in Indonesia. If Tesla is not investing here, it is not really a big problem for Indonesia.

The real game changer is when our SOE company, Indonesia Battery Corporation, has JV with both CATL from China and Korean Consortium ( Lead by LG Chem ) for end to end EV battery production supply chain in Indonesia. AlhamduliLLAH both JV are progressing well.

 

[tonyget]

The real game changer is when our SOE company, Indonesia Battery Corporation, has JV with both CATL from China and Korean Consortium ( Lead by LG Chem ) for end to end EV battery production supply chain in Indonesia. AlhamduliLLAH both JV are progressing well.

Just out of curious，is Indonesia economy primarily driven by SOE or private firms？

 

[Indos]

https://twitter.com/x/status/1630768341760774144

 

[Indos]

Just out of curious，is Indonesia economy primarily driven by SOE or private firms？

SOE contribution is quite significant and their total asset at 630 Billion USD (2021) is more than half (53%) of Indonesian GDP at 1.186 Trillion USD (2021).

Despite so, 61.07 % of Indonesian GDP comes from micro, small, and medium size companies (SME) based on very latest data which shows growth from 60.6 percent in previous survey (2017). Around 97 % Indonesian workforce work for this SME business, but mostly they operate in informal sector.

You can look on this thread to know more and see the data.

Micro, Small & Medium Enterprises in Indonesia: Backbone of the Indonesian Economy

Micro, Small & Medium Enterprises in Indonesia: Backbone of the Indonesian Economy 16 July 2022 The micro, small, and medium enterprises (MSMEs) of Indonesia are an interesting phenomenon. Why? Well, let’s take a look at three remarkable statistics: Indonesian MSMEs contribute slightly...

defence.pk

Indonesia has good and striving big private owned business as well, including in the digital sector like Gojek, Tokopedia, Bukalapak, etc.

FDI

Foreign Companies is also significant for our economy since their investment is usually around half of Indonesia total investment.

Last year Foreign Direct Investment is at 45.6 billion USD or 56 % of total Investment at 81.02 billion USD

https://www.nasdaq.com/articles/indonesias-fdi-jumps-in-2022-led-by-mineral-processing

 

[Indos]

ASEAN's Largest Train Factory in Banyuwangi Begins Operations​

News from Amaluddin • 1 hour ago

Banyuwangi: The largest railway factory in Southeast Asia, PT Steadler INKA Indonesia (SII), in Banyuwangi began operations. Along with the inauguration of the factory, passenger trains and electric rail (KRL) procurement contracts were also signed between PT INKA (Persero), PT KAI (Persero) and PT KCI or KAI Commuter with a total investment of around Rp. 9 trillion (581 million USD)

To meet the needs of manpower, INKA's workshop in Banyuwangi collaborates with the Job Training Center (BLK) in Banyuwangi. The workshop was inaugurated by the Deputy Minister of BUMN II, Kartika Wiryoadmojo, accompanied by the Banyuwangi Regional Leadership Communication Forum (Forkopimda), Thursday, March 9, 2023.

Also present were the Director General of Railways of the Ministry of Transportation, Mohammad Rizal Wasal, the Director General of Metal, Machinery, Electronics of the Ministry of Industry, Taufiq Bawazier, the President Director of PT INKA (Persero) Eko Purwanto, the President Director of PT KAI (Persero) Didik Hartantyo, and the President Director of KAI Commuter Suryawan Putra.

PT INKA's workshop in Banyuwangi will make a car body from the procurement contract. Gradually, a 4-kilometer test track and other facilities will be built. The facility is used to test completed wagons or locomotives.

Deputy Minister Kartika Wiryoadmojo said the largest railway factory in Southeast Asia was built to increase the production of export-quality railways. The presence of the workshop will automatically encourage job creation.

"PT. INKA itself has exported to various countries such as Bangladesh, the Philippines, Singapore, India, New Zealand, to Australia," said the man who is familiarly called Tiko.

He said the reason for choosing Banyuwangi as a location was because it was strategic. It is not too far from the port and station, making it easier to mobilize products.

"In addition, Banyuwangi is also known to strongly support the development of the business world to create jobs," he said.

Read: INKA Signs Train Procurement Contract with KAI and KCI

Meanwhile, the President Director of PT INKA, Eko Purwanto, added a train procurement contract with PT. KAI includes the procurement of 16 trainsets, 1 set consisting of 12 carriages, 612 SS New Generation Train Units for the 2023-2026 replacement program, and 10 luxury train cars.

"For KRL, the procurement is worth IDR 3.4 trillion, while for replacement trains and luxury trains it is IDR 5.5 trillion and IDR 150 billion, respectively," said Eko.

Banyuwangi Deputy Regent Sugirah hopes that the INKA workshop in Banyuwangi will create jobs and drive the local economy.

"I, along with the Regent of Ipuk, hope that this workshop will have an impact on driving the regional economy. Creating jobs and becoming a catalyst for public transportation is not only Banyuwangi, but also nationally related to massive and capable public transportation," said Sugirah.

MSN

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If all the facility is completed in PT INKA new factory, it will look like this inshaAllah

 

[Indos]

PT PAL's CEO on Submarines and Frigates for Indonesia, LPD for Philippine Navy, XLUUV project​