Indonesia aims to become key chain in global EV industry

Jakarta – Indonesian officials have emphasised the importance of developing downstream industries, particularly in electric vehicle (EV) battery production, to enhance the country's economic value.

Speaking at the inauguration of PT BLM Energi Baru Indonesia’s Lithium Iron Phosphate (LFP) battery manufacturing plant in the Kendal Industrial Park, Central Java, on October 8, Coordinating Minister for Maritime Affairs and Investment Luhut Binsar Pandjaitan highlighted that focusing resources on downstream industrial development is a directive from President Joko Widodo. One of the key policies driving this initiative is the cessation of raw material exports, aimed at building economic value within the nation.

According to the minister, the LFP battery plant is a strategic investment collaboration between Indonesia’s Investment Authority (INA) and China’s Changzhou Liyuan New Energy Technology Co., Ltd., a leading global LFP battery producer. This partnership aims to meet the growing global demand for LFP batteries, fueled by the rapid expansion of electric vehicle usage worldwide.

Luhut further explained that the LFP plant represents a cornerstone of Indonesia's integrated EV ecosystem. By completing the lithium battery production chain, Indonesia will be able to meet the demand for lithium batteries for up to three million EVs globally.

INA Chairman Ridha Wirakusumah also highlighted the rapidly increasing demand for LFP batteries due to the global transition to EVs and renewable energy, presenting a significant opportunity for Indonesia. By building strong production capacity, the country will be well-positioned to supply the rising demand for LFP cathode materials in the future.

The tax revenue from the digital economy sector in Indonesia reached 27.85 trillion IDR (1.75 billion USD) from 2022 to the end of August 2024, according to the Taxation Directorate General under the country’s Finance Ministry.

FPT IS Co., Ltd. and Metrodata Electronics, Indonesia’s leading IT company, signed a cooperation agreement on September 23 to establish a joint venture.