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Jakarta. Indonesia is taking a huge leap into electric vehicle industry and has appealed for technological support from China and South Korea in an ambitious industrial program that apparently makes Japan unhappy, the chief investment minister has said.
The EV technology is much simpler than combustion engines because it only needs battery and motor, which Indonesia can develop by its own, according to Luhut Binsar Pandjaitan, the coordinating minister for maritime affairs and investment.
“I’m one of the strongest supporters for the EV industry. Why? Because 96 percent of cars we are using now are made by Japan,” Luhut said in a recent webinar arranged the North Sumatran alumni of the Bandung Institute of Technology (ITB). The webinar on Friday was uploaded to the alumni’s YouTube account.
“Pardon me, but to be honest we are now under Japan’s ‘technology colonialism’,” Luhut said.
Indonesia is ready to build the EV industry because it has the key material for the making of lithium battery and is approaching China and South Korea to develop the technology, Luhut said.
“Japan is angry with us. They asked why we didn’t consider developing hybrid cars first. And I was accused of being pro-China,” the retired army general said.
“Why should we go hybrid while we can directly develop electric vehicles?” he added.
Lithium Battery
Indonesia has the potential to become key player in the global lithium battery industry and shouldn’t end up as merely a market for electric vehicles, the minister said.
“The key is lithium battery and we have the world’s largest nickel ore reserves. Several years ago, we began to develop the downstream industry [for nickel] but we couldn’t do that alone. We didn’t have the full technological application so we engaged with China,” Luhut said.
“We are now able to produce iron steel and carbon steel and by 2024 we will have the capability to build lithium battery because we can extract cobalt from low-grade nickel ore,” Luhut said.
“In Weda Bay industrial park, Central Halmahera [North Maluku], we are processing copper from Freeport mines to extract sulfuric acid, which will then go to Morowali [Central Sulawesi] or Karawang [West Java] -- where there will be a Hyundai electric car assembly plant and LG -- to produce lithium battery,” he said.
Luhut said Indonesia can become a key player in the global electric vehicle industry because all it needs is just “battery and motor”.
“We will become the second or third largest lithium battery producer in the world in 2027. Indonesia will become part of the global supply chain,” Luhut said.
Added Value
The government is making tremendous efforts to lift domestic industry to a new level, by sending young talents to foreign countries to learn, for instance, how to extract cobalt from nickel ore, Luhut said.
“Many don’t realize that during this challenging situation due to Covid-19, we enjoyed a surplus in international trade because of the iron steel export, which valued at $10 billion. Next year, the export value is targeted at $13 billion to 15 billion, and up to $35 billion by 2024,” he said.
“The current account deficit should no longer be an issue by 2024.”
Apart from nickel, Indonesia is also developing the downstream industry for bauxite in Bintan Island to begin production by January next year, he said.
Momentum
Satryo Soemantri Brodjonegoro, an advisor for Luhut, said Indonesia is gaining momentum in the EV industry and that President Joko Widodo has signed a decree on the acceleration of EV development.
“We shouldn’t let go of this momentum. EV technology is much simpler compared to combustion engine. In EV, it only needs battery, electric motor and computer,” Satryo said in the webinar.
“We must share a common vision here, that we will start producing EVs, otherwise we will be lagging behind other countries such as Vietnam.”
Satryo said there is no way the country can start the EV industry from scratch and South Korea’s Hyundai could likely become a partner as it plans to set up an assembly plant for electric vehicles in West Java.
“Hyundai will build a plant in Purwakarta. They can do that but there must be a scenario … that maybe within five years the entire components are built in Indonesia, including batteries,” he said.
“We cannot start from scratch, but we cannot let ourselves become merely an assembly plant or market either.”