Indonesia's abundant nickel reserves have successfully attracted many foreign investments into the electric vehicle (EV) battery ecosystem. "For nickel, almost all countries take part," Investment Minister/ Investment Coordinating Board (BKPM) head Bahlil Lahadalia claimed on Wednesday. Foreign investors are interested in not only the nickel mining sector but also the EV battery ecosystem, from upstream to downstream. "There are (investments from) LG from South Korea worth US$9.8 billion, from China worth US$5.2 billion, and Foxconn (Taiwan) worth US$8 billion. The UK will team up with one of the domestic private companies, while VW from Germany (Volkswagen) is with BASF," Bahlil elaborated.
An automotive company from the United States (US), Ford, has been exploring investment potentials in Indonesia. "Ford is just starting out, I have met the vice president who met me personally at the (BKPM) office," Bahlil said.
Indonesia has around 52 percent of global nickel reserves, the largest in the world. The Energy and Mineral Resources (ESDM) Ministry noted that Indonesia's processed nickel production in 2021 reached 2.47 million tons, up 2.17 percent compared to 2020's eventual figure of 2.41 million tons. Therefore, the Indonesian government is going the extra mile to develop the country's battery and electric vehicle (EV) ecosystem. Three factors can boost investments in the sector.
First, Indonesia is a large electric vehicle market, meaning that building factories in the country will be more effective. Second, about 80 percent of the raw materials for EV batteries, from nickel, cobalt, aluminum, and manganese, are in Indonesia. Third, the implementation of Law (UU) No. 11/2020 on job creation has simplified the licensing process, making it easier for investors to establish businesses.
The government also promises to exempt electric vehicles from luxury taxes (PPnBM) based on Government Regulation (PP) No. 74/2021, which will take effect from October 16 this year. The regulation states that the 0 percent luxury tax applies to battery-based or fuel cell electric vehicles. Besides, investors can take advantage of other incentives offered, from tax holidays, mini tax holidays, tax allowances, import duty exemptions, and import duties borne by the government to super tax deductions for those conducting research and development activities.