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View all search resultsWhy EV makers choose Vietnam, not nickel-rich Indonesia
Indonesia’s vast nickel wealth won’t save its green industrial ambitions if volatile regulations and a severe high-tech skills deficit keep driving global EV giants straight into the arms of Vietnam.
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A Vinfast car drives past the entrance of the VinFast electric automobile plant in Haiphong on Aug. 26, 2022. Having conquered most industries at home, optimistic chiefs at conglomerate Vingroup are setting their sights much higher as they ramp up plans to sell the first ever Vietnamese car in the mighty United States market.
(AFP/Nhac Nguyen)
W
hen news broke that electric vehicle manufacturers originally planning to operate in Indonesia had instead chosen Vietnam, it forced a critical question: What is going wrong in Southeast Asia's largest economy? The situation is ironic. Indonesia holds the world’s largest nickel reserves, yet its domestic EV manufacturing industry is struggling to take root.
The fundamental causes of this failure extend far beyond simple investment metrics; they lie in the structural quality of state policy, human capital development, institutional education and state support for foundational research and technology. Together, these elements form the indispensable building blocks of a healthy, green industrial ecosystem.
This corporate relocation is not merely a loss of short-term capital. It is an early warning that without sweeping, consistent reforms in education, training and industrial strategy, Indonesia risks becoming a mere supplier of raw materials rather than a hub for EV innovation, an urgent transition that cannot be compromised in a rapidly decarbonizing global economy.
Indonesia has long broadcast its grand ambition to achieve Golden Indonesia 2045, a vision to transform the nation into a developed, highly competitive regional manufacturing hub. Yet, it is impossible to realistically discuss the 2045 milestone if critical, forward-looking industries are already fleeing the country.
Two deeply intertwined structural issues explain this divergence: industrial policy and the broader manufacturing ecosystem, which encompasses human resources, research and technology.
Regarding industrial policy, investors face frequently changing regulations, weak cross-sector coordination and fiscal incentives that are either uncompetitive or poorly executed. Jakarta’s focus remains stubbornly anchored to the raw downstreaming of mineral resource extraction rather than high-value EV assembly. This regulatory volatility makes international investors hesitant to commit long-term capital.
By comparison, the fiscal support for industrial policy in China amounts to roughly 4 percent of its GDP, deployed through highly synchronized taxes, subsidies, credit lines and land allocations. Vietnam similarly offers corporate tax holidays of up to 15 years, import duty exemptions on components, land rent reductions and deep integration into global supply chains.
