The memorandum of understanding (MoU) was signed by Investment Coordinating Board (BKPM) head Bahlil Lahadalia and LG Energy Solution representatives in Seoul on Dec. 18 with South Korean Trade, Industry and Energy Minister Sung Yun-mo witnessing the signing. The deal is the result of a series of negotiations that started with a meeting between President Joko “Jokowi” Widodo and his South Korean counterpart, Moon Jae-in, in Busan, South Korea, in November 2019.

The MoU includes strategic investment projects in the EV battery cell industry that integrates the mining, smelting, refining, and precursor and cathode industries, according to a BKPM statement on Wednesday.

“This investment will make Indonesia the first country in the world that is integrating the electric battery industry [supply chain], from mining to electric car lithium batteries,” Bahlil told reporters in a virtual press briefing on Wednesday. “This is the biggest investment since the [1998] Reform Era and will serve as an opportunity for Indonesia to recover from the coronavirus pandemic.”

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Indonesia’s pursuit to boost local EV production and the EV battery industry reflects Jokowi’s ambition for “massive downstreaming”, which aims to turn the country from a commodity-driven economy into an industrial one. At the same time, massive foreign investment in the sector is expected to help boost the country’s economic recovery.

The government ordered in October its biggest state-owned enterprises (SOEs) to establish a battery holding company that will develop an end-to-end domestic supply chain for EV batteries.