Indonesia has received commitments from a number of manufacturers to produce electric cars in Indonesia.

Hyundai, Toyota, and Mitsubishi see that electric vehicles will be the trend of the future. Moreover, Indonesia as a tropical country is considered very suitable for the continuity of the electric vehicle business aside of its population as the promising market.

Supporting devices such as batteries are vital for electric vehicles. Batteries can even be called the main component for electric vehicles. Hence, the plan to establish an electric vehicle battery factory should be congratulated.

The Ministry of Investment has confirmed the plan to establish a battery factory. The construction of an electric vehicle battery factory owned by Indonesia Battery Corporation (IBC) and the LG Consortium from South Korea in Kota Deltamas, Karawang, will soon be realized.

The groundbreaking is planned to be carried out in the near future. According to the Minister of Investment/Head of the Investment Coordinating Board (BKPM) Bahlil Lahadalia, the downstream development of the metal mining industry requires a long and difficult process.

The plan involves various stakeholders, both at domestic and abroad. "We are grateful that this groundbreaking will finally begin soon. The work ahead will be even greater to build an integrated battery industry in Indonesia," he said in an official statement, Monday, 24 May.

This groundbreaking is a follow-up to the signing of the head of agreements (HoA) or the main agreement on battery investment projects between IBC and the LG Consortium last month. The total investment for the first electric battery in Indonesia reached US$9.8 billion or around Rp140 trillion (Rp14,300 per US$).

The electric vehicle battery cell industry is integrated with mining, smelting, refining, and precursor and cathode industries. This electric battery production facility will be the first in Asia and even in the world.

The forerunner of the collaboration between IBC and the LG Consortium began in 2019 when President Joko Widodo and South Korean President Moon Jae-In met in Busan, South Korea. After going through a series of assessment, negotiation, and study processes, a memorandum of understanding (MoU) was signed on 18 December 2020 in Seoul, South Korea.

Bahlil said that the MoU negotiations went through 25 document revisions in consultation with the Minister of State-Owned Enterprises (SOE) Erick Thohir. "This is one of the longest document preparation processes ever carried out by the Ministry of Investment/BKPM. After that, 15 intensive meetings were held, both at the leadership and at the technical levels. We really appreciate the dedication of the extraordinary team," he said.

The Ministry of Investment is currently finalizing the MoU between Hyundai to complete the joint venture (JV) plan to build a cell battery factory for the electric battery. The factory is planned to occupy an area of ​​33 hectares and absorb 1,000 Indonesian workers.

"Not only creating jobs in the regions, this investment cooperation is projected to make Indonesia, which was previously a producer and exporter of raw materials, into an important player in the supply chain for the electric vehicle battery industry," said Bahlil.

IBC was formed by four SOEs, Mining and Industry Indonesia (MIND ID), PT Pertamina (Persero), PT PLN (Persero), and PT Aneka Tambang Tbk (Antam). Meanwhile, the LG consortium consists of LG Energy Solution, LG Chem, LG International, POSCO and Huayou Holding.

LG Energy Solution is currently one of the largest electric car battery manufacturers in the world. Meanwhile, LG Electronics (LG Group) is the fifth largest company in South Korea in 2020 according to Fortune magazine.

Indonesia has the opportunity to become a major player in the electric vehicle industry and has a bright future in the electric vehicle industry and its derivatives if this collaboration is realized.

Writer: Firman Hidranto
Editors: Ratna Nuraini/Elvira Inda Sari/Sugiarti
Translator: Irvina Falah