Tesla putting down stakes in Indonesia? Not yet, top minister says

Dandy Koswaraputra
2022.05.26
Jakarta
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Tesla putting down stakes in Indonesia? Not yet, top minister says Indonesian President Joko Widodo reacts while talking with Elon Musk, the founder and chief executive of Tesla Motors, during their meeting at the SpaceX launch site in Boca Chica, Texas, May 14, 2022.
[Handout Indonesia’s Presidential Palace via Reuters]

A top aide to the Indonesian president is playing down expectations that U.S. electric carmaker Tesla will swoop in to invest in manufacturing operations in Southeast Asia’s biggest economy. 

Luhut Pandjaitan, Indonesia’s minister for maritime and investment affairs who is also considered the most trusted aide to President Joko “Jokowi” Widodo, tempered claims made by a fellow cabinet member last week that Tesla – steered by the world’s richest man – had agreed to build an electric vehicle plant in Central Java.

No official deal had been reached and the Indonesian people needed to be “patient,” Luhut said earlier this week.

“Making an investment decision is not as easy as snapping fingers. It takes a long process and time. Moreover, this is an investment of huge value. So we have to be patient,” he told reporters.

“But what must be remembered, this is still in the negotiation stage, so once again, all must be patient.”

But it was easy to understand the unbridled enthusiasm of Luhut’s colleague, Investment Minister Bahlil Lahadalia, when he announced on May 19 that Tesla had agreed to invest in battery and electric vehicle manufacturing in Indonesia.

“But I can’t announce the month yet. Let’s wait, because we haven’t signed an agreement yet. How much investment is still being kept secret, still waiting. But this is good stuff, big stuff,” Bahlil said at the time.

He blurted out the informal announcement days after Jokowi and Elon Musk, Tesla’s founder and CEO, were photographed hanging out and seeming to have a good old time at the rocket launch site in Texas for Musk’s aerospace company, SpaceX.

Jokowi had popped by to meet with Musk while on his way home to Jakarta and a day after attending a U.S.-ASEAN summit in Washington. Musk was fresh off his U.S. $44 billion acquisition of Twitter.

The multibillionaire many times over sported a black t-shirt, while the president of Indonesia wore a white dress shirt untucked with the sleeves rolled up to his elbows.      

Afterwards, Jokowi said he and Musk had chatted about “technology and innovation.”

Musk, for his part, said he was “fired up” by Indonesia’s enthusiasm.

“We’re going to look closely from the Tesla and SpaceX standpoint to try to do some partnerships in Indonesia,” he said in a video that circulated online after the meeting. 

Meanwhile, a statement from Jokowi’s office said Musk planned to visit Indonesia in November, the same month when the Southeast Asian nation hosts the G-20 summit.

Luhut, too, acknowledged this week, that “Tesla’s team is moving really fast.”

“They came to Indonesia earlier this month, visited several nickel processing plants, and we also responded quickly to show our seriousness and support,” Luhut said. 

India vs Indonesia

Besides, it is no secret that while Indonesia has been wooing Musk for some years now, the Tesla founder, too, is in search of large markets that are not China.

Jakarta has been trying to woo Tesla for a few years now as it seeks to take advantage of being the world’s largest producer of nickel, a critical element in electric vehicle (EV) batteries. 

In 2019, Indonesia released a road map to make the country a regional manufacturing hub for electric vehicles and their ecosystem, including nickel processing as well as battery and EV production. Jakarta has also set a goal that by 2025, one fifth of cars made in Indonesia will be electric vehicles.

For his part, “Musk is looking to emerging economies that have less regulation, [lower] import tariffs and good infrastructure,” said Yayan Satyakti, an economist at Padjadjaran University in Bandung.

“Elon Musk likely sees Indonesia as an emerging economy with great potential and prospects,” Yayan told BenarNews.

Indonesia is deemed more attractive than India or Brazil, thanks to investment-friendly reforms following the passage of the so-called jobs creation law.

Yayan said Musk no longer saw China as a lucrative market for Tesla because the country is home to carmakers that are already manufacturing electric vehicles. 

The Chinese government’s pressure on Tesla has also prompted the company to look elsewhere for supply chains and new markets, he said.

However, Muhammad Nur Yuniarto, an engineer who researches electric vehicles, said Indonesia may not be ready to be the site of a Tesla Gigafactory. A Gigafactory is how the trade refers to Tesla’s manufacturing plants.

“Especially in terms of the local manufacturing of components, I think it’s still not ready,” he said on CNBC Indonesia.

ID-rocket.jpg

Starship prototypes are pictured at the SpaceX South Texas launch site in Brownsville, Texas, U.S., May 22, 2022. [Reuters]

Papuan rocket launch site

Meanwhile, Indonesia has offered Musk’s other company, SpaceX, to build a launch site for his space project in Biak, an island in Papua province.  

The proposal for a SpaceX launch site in Biak, an island near the northern coast of Papua, has been criticized by locals, although it is not clear if Musk had seriously considered it. 

“Until now, there’s no certainty about SpaceX’s investment plans in Indonesia for rocket launches,” Erna Sri Adiningsih, executive director of the Indonesia Space Agency (INASA), told BenarNews.

Erna said SpaceX had once considered building a landing and launch site in Indonesia for intercontinental transport rockets.

“But there has been no concrete follow-up,” she said.

Tineke Rumkabu, an activist who advocates for victims of alleged human rights abuses in Papua, where a separatist insurgency has simmered for decades, said that Biak people had vowed to resist any plan to build a rocket launch site there.

“We have been on this land our whole life. We will defend our land,” Tineke told BenarNews.

“What about the future fate of our children?” she said.

“Give children schools so that they can work on their land.”

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