Coordinating Maritime Affairs and Investment Minister Luhut Pandjaitan told reporters after a meeting with the Environment and Forestry Ministry in Jakarta on Monday evening that the government “hoped the assessment could be finalized by Dec. 18”.

Once the assessment is completed, companies can begin development on the US$3.2 billion factory in Morowali regency, which will produce lithium batteries. Construction work is expected to begin in January.

Global demand for electric vehicles is rising, and the Morowali battery plant is one of Indonesia’s many investments in efforts to tap the global supply chain.

The World Bank in its presentation expressed concern that Indonesia’s complicated export procedures might leave the country less integrated in global supply chains than other countries.

“Exporting cars requires being part of integrated supply chains across multiple countries,” reads a presentation slide from the World Bank recently conveyed to President Joko “Jokowi” Widodo, a copy of which was obtained by The Jakarta Post. “Indonesia is largely cut off.”

The Washington, DC-based institution said the relative isolation from global supply chains in manufacturing was due to a series of nontariff measures that made importing capital goods difficult for carmakers.

The government has been working to push the local electric vehicle (EV) industry by issuing recently a presidential regulation that regulates and incentivizes the industry to spur growth, although it still lacks supporting regulations from other ministries before the cars can hit the road.

Luhut on Monday did not name the companies involved in the car battery project but said the government would consider “various investors”, including German automakers Audi, Mercedes-Benz and Volkswagen.

Chinese battery firm GEM Co. Ltd., one of Tsingshan’s partners, expects to start trial production at its nickel and cobalt HPAL plant in Morowali in August 2020, the company’s president said earlier this month, Reuters reported.

As part of its efforts to boost the electric vehicle industry, the government has banned exports of nickel ore starting on January to make more raw material available for car battery makers in the country.

The export ban will take effect two years earlier than previously planned.

In addition, the government also plans to import and recycle old car batteries to reduce the need for extracting raw metals for new batteries.

“That way we can be more sustainable,” Luhut said. He went on to say that Indonesia also wanted companies to start investing in lithium battery recycling.

However, Article 69 of the 2009 Environment Law bans importing hazardous and toxic waste, including old car batteries.

Environment and Forestry Minister Siti Nurbaya Bakar separately said a compromise was for Indonesia to only import “processed batteries”, namely old batteries stripped down to their recyclable components.

“The environment ministry is also working on other rules and regulations to support the processing of battery-related waste,” she said.

The government expects the local automotive industry to begin domestic EV production by 2022 to reach the target of exporting 200,000 electric cars by 2025, around 20 percent of the expected total of 1 million car exports in that year.

Association of Indonesian Automotive Manufacturers (Gaikindo) data show that automotive exports increased over the past few years. In 2018, Indonesia exported 264,553 completely built-up units, an increase from 231,169 cars exported in 2017. The figure was also up from the 194,000 cars exported in 2016 and 207,000 in 2015.

Popular

Is Indonesia really ready to embrace dual citizenship?

Palm oil plantation-less mills lead to increase deforestation

Prabowo inaugurates construction of Majapahit palace replica