In recent years, Indonesia has positioned itself as a significant competitor in the electric vehicle (EV) industry within Southeast Asia. This development is expected to not only boost the country's manufacturing output but also spur foreign direct investment (FDI). By diversifying its economic reliance on the commodity cycle, Indonesia's manufacturing sector could experience a structural revival, driven by the growth of the EV sector.

A special report titled "Nickel odeon," featured in the Global Themes 2023 report, highlighted Indonesia's crucial role in the EV industry. The country's progress in developing a complete EV production chain, encompassing nickel processing, EV battery manufacturing, and electric vehicle assembly, is seen as a pivotal factor in its competitive advantage. Indonesia's abundance of nickel reserves and its status as the world's largest producer of nickel contribute significantly to its prowess in the sector. This strategic advantage has attracted rising EV-related investments, propelled by the increasing demand for electric batteries and electric vehicles worldwide.

The International Energy Agency (IEA) predicts a substantial rise in global EV sales, with an estimated close to 14 million units in 2023. Indonesia, which saw over 10,000 EV sales in 2022, has witnessed a boost in sales this year due to slashed VAT rates and government subsidies. Notably, electric motorcycles are projected to dominate the two-wheeler market, accounting for a significant 45% share of total motorcycle sales in Indonesia by 2030.

The success of Indonesia in the EV industry is not only expected to benefit the country's economy but also holds the potential to reduce its dependence on commodity-based revenues. As Indonesia continues to develop and expand its manufacturing sector, the growth of the EV industry is likely to play a vital role in shaping the nation's economic landscape in the years to come.

 

Source: shaun.cochran@csla.com