Indonesia Update W2 May 2024

Overview

The Sustainable Development Goals (SDGs) designed by the United Nations in 2015 are a global call to end poverty, protect the planet, and ensure all people enjoy peace and prosperity. The implementation of the SDGs, which consist of 17 goals, 169 targets and 289 indicators, is coordinated into four pillars of Human, Social, Economic and Environmental by 2030. Based on the Sustainable Development Report 2023, Indonesia is currently ranked 75th in the world, a positive growth from the 102nd in the previous four years, with increase in score from 64.2 in 2019 to 70.16 in 2023. A score of 100 indicates that all SDGs have been achieved. Indonesia’s position is slightly behind Thailand of 74.78, Vietnam of 73.72, and Singapore of 71.78.

Latest Update

MRT Collaborates with Sojitz Cooperation
- On April 17,2024 PT MRT Jakarta (Perseroda) and Sojitz Corporation enter into Design and Construction Agreement for CP205 Phase 2A of MRT for railroads and track system. CP205 contract period lasts for 75 months, until the end of 2029.
- CP 205 is part of the Jakarta MRT phase 2A construction work contract package. This contract package 205 includes substation system, power distribution system, overhead contact system, signaling, telecommunication, Supervisory Control and Data Acquisition (SCADA), track, and platform screen doors.
- The contract value is IDR 2 trillion. CP205 will support Jakarta MRT operations from Bundaran HI to Kota. Sojitz Corporation plans to give its continuous support for Jakarta’s MRT.
- As of March 25, 2024, phase 2A construction progress stands at 33.36%. CP201 Thamrin-Monas: 02%, CP202 Harmoni-Mangga Besar: 28.34%, CP203 Glodok-Kota: 49.97%. CP206, train procurement, is in the proposal preparation and bidder clarification stage, while CP207, automatic fare collection, is in the tender document preparation stage. MRT aims for phase 2A operations in stages: Bundaran HI-Monas in 2027 and Harmoni-Kota in 2030.

Energy Transition from Coal to Nickel
- Indonesian coal company PT Harum Energy is looking to buy more nickel mines as it ceases further investment in fossil fuels to prepare for the energy transition.
- The firm has bought stakes in three nickel processing plants and is weighing an initial public offering of the unit once the market improves. It expects nickel to account for half of its revenues by the end of this year, from just over 10% in Recently Harum announced a partnership with China’s Tsingshan Holding Group the world’s top producer of stainless steel and nickel that dominates the Indonesian industry. Under the deal, the conglomerate will own up to a 49% stake in Harum’s nickel unit in return for capital and technical expertise.
- Other Indonesian coal miners have been using their profits to shift to cleaner supply chains. PT Adaro Energy is building an aluminum smelter in Kalimantan, on 600 Ha of land with an estimated total investment of around US$2 billion and is expected to be fully operational by the end of 2025 or early 2026, while PT Indika Energy and PT United Tractor bought stakes in nickel and other non-coal mining assets last year.

Healthcare Sector Potential
- Indonesia healthcare sector offers a massive Health Minister Budi Gunadi Sadikin invites foreign businesses to consider entering Indonesia’s healthcare sector, and the recent invitation was sent to the Swedish as part of an MoU signed in December 2023 to cooperate in the transportation, energy, mining and healthcare industry. FDI from Sweden topped $50.4 million throughout 2023. The money went to 270 projects. Swedish Ambassador signaled the country’s interest in investing in Indonesia’s healthcare sector.
- Indonesia’s average life expectancy is 72 years, with an annual healthcare spending per person of around $130. In comparison, Malaysia’s life expectancy is 76 years, with an annual healthcare spending of $430 per person, while Singapore’s life expectancy is 84 years, with annual spending of approximately $3,000.
- Given Indonesia’s large population, investing in its healthcare sector could yield significant If Indonesia’s healthcare system matched Malaysia’s efficiency, the potential market could reach $81 billion. If Indonesia extends its life expectancy to 84 years within a decade, healthcare spending could rise by $3,000 per person, potentially resulting in a healthcare sector worth over $800 billion considering the total population.

Exploring Indonesia’s Electric Vehicle (EV) Market
- Having abundant reserves of nickel and other crucial minerals, Indonesia is ambitious to develop an integrated EV ecosystem and to achieve the target of 1 million EV production and 2.5 million EV users by 2035, the Government of Indonesia has been proactively approaching global investors and working on domestic regulations to attract more investments, competing with Thailand as the largest automobile manufacturer in the region. The ecosystem will cover the upstream nickel mining, nickel based processed products including EV batteries, to electric vehicle manufacturing.
- Japanese automobile shows more tendencies to grow their hybrid ecosystem, given their complex and large supply chain system in various countries, but global dynamic movements have pushed Toyota to ramp up EV production since last year, shifting more than half of its R&D staff and budgets to accelerate its work on electrification, advanced battery technologies and software-based vehicles. In June, Toyota announced plans to streamline its EV manufacturing process with new, modular designs, giga-casting and self-propelling production technology to lower the costs of EV production and make its factories more efficient. To date, its EV production base is still concentrated in Japan with 2 factories and US with its latest investment in Kentucky.
- The government of Indonesia has announced deals worth more than US$ 15 billion with international companies for nickel mining, refining, and battery manufacturing in the country. Notable highlights during the 2021-2023:
- In 2021, LG Energy and Hyundai Motor Group embarked on the development of Indonesia’s first battery cell plant with an investment value of US$1.1 billion, designed to have an ultimate 10 GWh capacity, of which the first production is scheduled in The output is targeted to support Hyundai’s electric car manufacturing in Indonesia.
- In 2022, Indonesia’s Ministry of Investment entered an MoU with Foxconn, Gogoro Inc, IBC, and Indika Energy, to work on two-wheel EVs and e-mobility system.
- In 2023 Indonesian state mining company Aneka Tambang has engaged China’s CATL consortium in an agreement for integrated processing from nickel mining to secure ore supply for the processing, EV battery manufacturing to battery recycling.
- In 2023 LG Energy is reported to invest for US$3.5 billion for nickel smelter in Batang, Central Java to produce 150,000 tons of nickel sulfate However, no details was found with regards to its progress. Batang industrial park developers couldn’t provide further information.
- In 2023, Brazilian nickel miner Vale Indonesia and Zhejiang Huayou Cobalt have collaborated with Ford Motor to establish a hydroxide precipitate (MHP) plant in Southeast Sulawesi province, planned for a 120,000-ton capacity of nickel output, targeting operation in 2027.
- In 2023, The Minister of Industry mentioned that Mitsubishi Motors has allocated approximately US$375 million for production expansion in Indonesia, including commencing its Minicab-MiEV electric car production in the country from December
- In 2022-2023 state-owned enterprises PLN and Pertamina has been developing charging stations in several cities in the Indonesian archipelago and launched partnership programs to speed up the development.

Other notable higlights in 2024:

BYD Targeting 2026 COD
- Chinese automotive manufacturer BYD announced its US$1.3 billion investment to build an electric vehicle plant in Indonesia. The 108 Ha plant, located around two hours from Jakarta in the West Java province, is expected to begin operations in January 2026, targeting to produce up to 150,000 units per BYD is teaming up with Suryacipta Swadaya, the industrial estate arm of IDX-listed construction firm Surya Internusa Group. Suryacipta owns the Subang Smartpolitan industrial park, where BYD’s factory will be located. Subang was finally chosen among the other two industrial parks in West Java – namely GIIC Deltamas and Artha Graha due its competitive land price as a new site development.
- BYD’s investment makes it the latest automaker to set up EV manufacturing operations in Indonesia. South Korea’s Hyundai and China’s Wuling have both had EV plants in the country since 2022. Apart from localization of electric batteries in collaboration with PT Gotion Green Energy Solutions Indonesia (Gotion Hi-Tech), Wuling has currently produced two electric cars locally at its factory in Cikarang, West Java – Wuling Air EV and the BinguoEV.

Vinfast Investment in Indonesia
- Vietnamese EV manufacturer VinFast has committed to a US$1.2 billion long-term investment to build an EV factory in Expected to begin production in 2026, the factory will have a capacity of 50,000 units per year.
- In January 2024, Vinfast announced the groundbreaking ceremony for its new facility in India. Located on a 400-acre site (around 161 hectare) within the Tamil Nadu Industrial Promotion Corporation (SIPCOT) industrial park in Thoothukudi, the company has committed to a US$ 2 billion agreement with the Indian government. The initial investment for the first five years is US$ 500 million, targeting production of 150,000 vehicles annually.
- In 2023, Vinfast announced groundbreaking on its first overseas manufacturing plant in Chatham County, North Carolina, a US$4 billion EV factory, slated for completion in 2025, with a total production of 150,000 vehicles annually.

GAC Aion Started EV Distribution in Indonesia
- After Thailand, GAC Aion, a car company from China chose Indonesia as the second country in Southeast Asia for its EV assembly as a gateway for EV production in ASEAN. This was marked by the signing of a Distribution Agreement between GAC Aion New Energy Automobile and PT Indomobil Sukses Internasional Tbk recently in April 2024.
- Proclaimed as one of the top 3 EV manufactures in the world, GAC Aion’s sales reached 1 million units in just four years and eight months, in December 2023.
- In the Southeast Asian market, GAC Aion claims to have made significant progress in Thailand, Malaysia, Singapore, Cambodia, Vietnam, and the Philippines, and now extending its hand towards Indonesia. The company plans to build manufacturing facilities in Indonesia in line with its market penetration in the country.
- In Thailand, on February 2024, the company broke ground at an estimated project cost of THB 2.3 billion ($65 million) for EV production facility located at Industrial Estate Rayong in Rayong province in the country’s Eastern Economic Corridor. The facility is envisaged to be built in two phases, with the first phase of construction expected to be done by July Overall, the company has targeted an annual production capacity of 50,000 units for the Thai plant.

Volkswagen Investment Plan in Indonesia
- At Hannover Messe 2024 on April, the Minister of Industry secured a commitment from Volkswagen to soon establish an EV facility in Indonesia, with plans to direct the operation to Batang KITB, which hosts a special cluster for German industries.
- At the same time, Volkswagen plans to expand its manufacturing plant in South Africa in the Eastern Cape to manufacture a new SUV in 2027, with an investment of US$210.67 million; South Africa is the largest automotive manufacturing internal combustion engines (ICE) hub on the African continent, hosting global brands such as Toyota, Isuzu, Volkswagen and Mercedes. Volkswagen also increased its investment in Brazil for hybrid and EV markets reaching US$ 1.83 billion.

Flash News

Jokowi Invites Singapore to Develop Halal Industrial Estate
- President Jokowi met with Singapore Prime Minister Lee Hsien Loong at the Bogor Presidential Palace on April 29, 2024. Jokowi invited PM Lee to be a developer in halal products in three Indonesian regions to further develop halal cluster in Indonesia; namely: Halal Modern Valley in Serang, Banten; Halal Industrial Park in Sidoarjo, East Java; and Bintan Inti Halal Hub (BIHH) in Riau Islands.
- The 500 Ha Modern Halal Valley is located within the Modern Cikande Industrial Estate (MCIE), in Serang, Banten, which was built by PT Modern Industrial Estate, a subsidiary of PT Modernland Realty Tbk.
- With an area of 112 hectares out of a total area of 530 Ha, KIH Sidoarjo, better known as SAFE and LOCK Halal Industrial Park (HIP), was developed by PT Makmur Berkah Amanda Tbk. (The developer is planning for an expansion of around 1,000 Ha, targeting a Halal SEZ – source of information: DPMPTSP Jatim – 14 May, 2024)
- Standing on 106 hectares of land, KIH Bintan, inside Bintan Industrial Estate, is part of the government’s commitment to meeting the needs of the Islamic economy. Halal food and ingredient processing has been developed inside the halal hub. Starting from agricultural raw materials such as coconut, plantations, and livestock such as crabs. Packaging and logistics services are also available in the halal hub.

Uni-Charm purchases REC from PLN
- IDX-listed PT Uni-Charm Indonesia Tbk (IDX: UCID), operating in the sanitary napkin industry, announced on April 30 its acquisition of 143 units of Renewable Energy Certificates (REC) from PT PLN for its factory in Karawang, West Java Province. The company stated in a press release that the purchase of REC for its Factory I in Karawang is part of its efforts to transition to renewable-based energy in support of the government’s carbon emissions reduction program.
- In addition, UCID officially inaugurated three rooftop solar panels with a combined capacity of 12 MWp installed at the Karawang factory (in 2022), as well as two other plants in East Java (in 2023). With these efforts, 16,000,000 kWh/year of energy produced by the 3 factories has successfully been converted to green energy, contributing to a reduction of more than 14,000 tons of CO2 produced annually. Moving forward, the company aims to procure more RECs from PLN, targeting to achieve 100% renewable energy usage by 2030.

PGN Plans Mini FLNG Plant in East Java
- State gas distribution company PT PGN is planning to convert its unfinished LNG regasification project in Teluk Lamong, East Java into small-scale floating LNG plant, intending to absorb an oversupply of gas from East Java. No further details were
- The Teluk Lamong LNG receiving terminal project, which is initially slated to start production in 2020, is designed to anticipate gas supply shortage in East Java. It turned out; however, the province is having a gas surplus as a number of gas fields within the area were The Teluk Lamong LNG terminal project is designed to process 40 MMCFD of gas, ramping up to 180 MMCFD when fully developed.

SEG Solar, Grand Batang City Sign Land Deal for SE Asia’s Largest PV
- US producer of photovoltaic (PV) modules SEG Solar (SEG) and Central Java industrial park Grand Batang City held a signing ceremony on May 15, 2024, to execute a Land Utilization Agreement for the development and operation of a photovoltaic industrial park in the Batang Regency.
- The park is anticipated to include factories for the production and assembly of silicon ingots, wafers, cells, and modules and is set to become Southeast Asia’s largest photovoltaic industrial park to The SEG Indonesia PV industrial park project will have an investment exceeding US$500 million and will cover over 40 hectares.
- The plan for the park includes a vertical integration capacity of 5GW for silicon wafers, 5GW for solar cells, and 5GW for Pursuant to the first phase of the project, SEG will construct facilities with a production capacity of 5GW for solar cells and 3GW for modules, with an expected completion date in Q2 2025. The cells produced at this park will supply SEG’s global module factory, ensuring the traceability of the supply chain and guaranteeing the reliability and stability of core material supply for modules.

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