Rich in minerals, Indonesia dares to dream of an EV future
We believe Indonesia’s strategy to move up the electric vehicle supply chain by restricting its mineral exports and inviting more investment should pay dividends for growth. However, more needs to be done to integrate the economy into global manufacturing processes.
What you will learn:
- Indonesia accounts for 40% of global nickel production, a critical mineral in producing EV batteries. While it’s difficult to judge the effectiveness of Indonesia’s ban on nickel ore exports, implemented in 2020, investment inflows to the smelting sector as well as battery and car manufacturing have continued.
- Successfully integrating into global EV supply chains will bring huge benefits for the Indonesian economy. Higher investment, technological spillovers, and more employment will all help lift the medium-term economic outlook.
- Still, Indonesia faces some challenges. The ease of doing business in Indonesia is relatively low, which might make firms turn to other countries to invest in. In addition, advances in technology could make other types of batteries that don’t need much mineral input more attractive. Meanwhile, delays in the transition to green energy might be a disadvantage.
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