- Indonesia’s pro-EV policies have attracted global investors to the country, but experts say they could also boost investments in Southeast Asia’s auto industry more broadly.
- The Southeast Asian country is rich in copper, nickel, cobalt and bauxite, essential materials for the manufacture of electric vehicle batteries.
- Indonesia has banned exports of certain metals and minerals in a bid to attract investors and manufacturers who need those materials to its shores.
Korean automaker Kia displays the “EV6 GT-Line” electric vehicle during the 30th Gaikindo Indonesia International Motor Show in Tangerang on August 10, 2023.
Yasuyoshi Chiba | Afp | Getty Images
Indonesia’s pro-EV policies have attracted global investors to the country, but experts say they could also boost investments in Southeast Asia’s auto industry more broadly.
Indonesia could be the “door” to the rest of the Association of Southeast Asian Nations, said Anindya Novyan Bakrie, CEO and president director of Bakrie & Brothers, an Indonesian conglomerate whose electric vehicle unit VKTR makes electric buses and electric vehicle parts.
The Southeast Asian country is rich in copper, nickel, cobalt and bauxite, essential materials for the manufacture of electric vehicle batteries. Indonesia is the largest exporter of nickel, It represents 22% of global reserves, according to a report by ASEAN Briefing.
Indonesia has courted the likes of Tesla hoping to turn its resource riches into a key hub of the global supply chain for electric vehicles.
“Indonesia’s rich endowment in natural resources needed for electric vehicles underpins their appeal… and is certainly a pull factor for investments in electric vehicles, especially after a ban on nickel ore and a government requiring every increasingly benefit from its natural resources to unlock economic growth,” Koketso Tsoai, automotive analyst at BMI Fitch Solutions, told CNBC.
Indonesia has banned exports of certain metals and minerals in a bid to attract investors and manufacturers who need those materials to its shores.
The country’s goal of becoming a global hub for electric vehicle batteries has received significant support in recent years. Asian automakers like toyota and hyundai Have made billion dollar investments to expand production of electric vehicles facilities in Indonesia.
TO ASEAN Investment Report 2022 It noted that electric vehicle battery production accounted for a significant share of foreign direct investment in the region between 2019 and 2021, especially in Indonesia, Malaysia and Thailand.
Despite Indonesia’s efforts, the country still faces obstacles in boosting vehicle production.
“It will be difficult for Indonesia to replace Thailand as a regional vehicle production hub as the latter has a long-established export-oriented automotive industry. Indonesia will also face challenges from lower-cost producers such as Vietnam and the Philippines,” he said. Nishita. Aggarwal, automotive analyst at EIU.
Still, the growth of Indonesia’s electric vehicle sector could give a halo effect to its neighbors. By providing access to key materials for electric vehicle batteries, the country “could attract much more investment and… help ASEAN as a region adopt electric vehicles more quickly and cheaply,” according to a report by maybank.
Although Indonesia’s natural resources play an important role in building ASEAN’s competitive EV ecosystem, Bakrie & Brothers suggest that investors are likely to look at the region as a whole.
The company’s CEO said that “I think producing real electric vehicles in Indonesia is something that these companies will consider ASEAN as a region.” He believes countries can “combine forces” to bring different strengths and expertise to the benefit of the region’s electric vehicle ecosystem.
Malaysia, for example, offers an “even more specialized high-tech product mix in an era of increasing digitalization in the automotive industry,” said BMI’s Tsoai.
He noted that within ASEAN, Indonesia will take on a “huge role in the upstream sector of the electric vehicle supply chain.” However, Indonesia’s dominance in this area could complement the experience of other Southeast Asian countries and boost the region’s EV ecosystem as a whole.