Indonesia has halted exports of raw nickel since 2020 and shifted its focus to exports of processed products such as lithium batteries. This step has strengthened Indonesia's position as a major player in the global electric vehicle market which relies on lithium-ion batteries as a power source. Therefore, Indonesia is considered ready to support the electric vehicle industry in the world. Wholesale Banking Director of UOB Indonesia, Harapman Kasan, said that more than 10 million electric vehicles have been used worldwide. Data from The International Energy Agency states that this figure will continue to increase. Car manufacturers are also continuing to try to attract more people to use electric vehicles, including electric motorbikes and sport utility vehicles (SUVs). In terms of electric vehicles, Indonesia has big plans to become a major player and wants to continue strengthening its position. The Indonesian government has even set a target of operating 2.1 million electric motorcycles and 400 thousand electric cars by 2025. This goal was achieved with the launch of a roadmap worth US$17 billion. Of the number of electric vehicles, 20 percent will be produced domestically. To support this plan, the Government of Indonesia has launched a number of fiscal and non-fiscal incentives to support the development of electric vehicles, such as tax incentives and supporting infrastructure.

According to Harapman, an important thing to note is that Indonesia is rich in mineral resources needed by the electric vehicle industry, such as alumina, cobalt, manganese and nickel. Nickel itself is an integral component in the production of lithium-ion batteries. According to the United States Geological Survey (USGS), Indonesia has the world's largest nickel reserves of 21 million tons or 22.3 percent of the world's nickel reserves. As for 25 to 40 percent of the cost of making an electric vehicle is for the battery. In 2013, Indonesia's nickel ore exports reached 64 million tons, or 35 percent of global exports. However, the following year, Indonesia imposed a mineral (including nickel) export ban. This policy is to encourage the development of domestic processing facilities and maintain nickel reserves. Since the ban on nickel exports, Indonesia has recorded an increase in investment in smelter construction and other downstream processing activities. In this process, raw nickel is processed into more high-value end products such as lithium batteries and battery packs needed for electric cars. As of August 2021, there are 13 operating nickel smelters. The government projects a total of 30 nickel smelters to operate by 2024. Indonesia has also issued an omnibus law which simplifies regulations from 79 laws into one law. According to the omnibus law which came into force in February 2021, nickel processing is now part of the priority sector for foreign investment. However, foreign mining companies are required to divest shares owned by foreign shareholders after 10 or 15 years of production so that in the 15th year of production, 51% of the shares will be held by domestic shareholders. As an arm of the government, the Ministry of Investment/Indonesian Investment Coordinating Board (BKPM) has also facilitated the investment of South Korea-based LG and China's CATL in the electric vehicle battery cell industry worth USD 9.8 billion and 5.2 billion respectively. billion US dollars. The two companies want to be part of the supply chain for the electric vehicle battery industry in Indonesia from upstream to downstream, which consists of mining, smelting and refining as well as the precursor and cathode industries which are vital in the production of electric vehicle batteries. Another effort that the government is currently intensifying is the construction of the first electric vehicle battery factory in Southeast Asia, located in Karawang New Industrial City in West Java. This US$1.1 billion collaborative effort was forged between PT HKML Battery Indonesia, owned by a consortium of South Korean companies, and PT Industri Batteries Indonesia, a subsidiary of a state-owned mining company. President Joko Widodo stated that the investment in the factory demonstrated the government's willingness to tap into Indonesia's rich nickel reserves. Harapman assessed that Indonesia's efforts to become a major player in the world in the electric vehicle supply chain had produced results. Evidenced by the increasing number of manufacturers choosing countries in Southeast Asia as alternative locations besides China.

Source: https://www.pajak.com/economy/indonesia-ready-topang-industrial-kendaraan-listrik-dunia/