The Investment Opportunity for an Electric Vehicle Ecosystem in Indonesia

The Investment Opportunity for an Electric Vehicle Ecosystem in Indonesia

  • InCorp Editorial Team
  • 3 October 2022
  • 5 minute reading time

In 2022, Indonesians are increasingly showing interest in the presence of electric vehicles. The government continues to push this trend by fast-tracking the electric vehicle ecosystem. In mid-September 2022, President Joko Widodo even instructed the electrification of transportation for government officials.

Why Develop the Electric Vehicle Ecosystem?

The increasing popularity of electric vehicles is not only happening in Indonesia. The usage of electric vehicles in Indonesia is spiking each day. Not only private vehicles but public transportation has begun to switch to electrification.

Various other countries in the Southeast Asian region are also participating in developing the electric vehicle ecosystem market. One of the causes is the global race for governments to reduce carbon emissions significantly. On the other hand, expanding the electrification trend of land transportation also presents massive economic potential.

Based on the analysis of the International Renewable Energy Agency, the presence of electric vehicles in the Southeast Asia region will be able to reach 20 percent by 2025. The prediction is quite impressive, considering the 680 million population throughout Southeast Asia will continue to grow.

Especially in the past few years, the economic level of the middle-class community has become more substantial, which can have a positive impact on the development sector of the electric transportation industry.

The Electric Vehicle Ecosystem Blueprint in South East Asia

Various countries in the Southeast Asian region already begin to prepare and implement plans to develop the electric vehicle ecosystem market. Steps to industrialize components and materials that support electric vehicle infrastructure are visibly taken. The infrastructure to build the ecosystem includes exports of raw materials, domestic battery production, and additional charging centers.

Battery Manufacturing for Electric Vehicles

Apart from China, countries in Southeast Asia are starting to emerge as alternatives to electric vehicle infrastructure providers. Mainly for manufacturing lithium-ion batteries as a vehicle power source. Indonesia is one of the strongest names besides China as a battery manufacturing country.

In June 2022, under President Joko Widodo, Indonesia opened its first electric vehicle battery factory in Central Java.

The Investment Opportunity for an Electric Vehicle Ecosystem in Indonesia

The initiative was also well received by foreign corporations. LG Energy Solution and Hyundai Motors are also interested in participating in developing renewable energy-based economic opportunities by starting the construction of an electric vehicle battery factory in Indonesia. The South Korean manufacturer plans to begin mass-producing battery needs in 2024.

The increasing interest in producing electric vehicle batteries comes from Indonesia’s abundance of nickel reserves. These materials are the main components in the design of lithium-ion batteries. Apart from Indonesia, Vietnam also has a lot of nickel reserves, making the country an attractive location as an investment destination for developing the EV ecosystem.

Indonesia Encourages the Use of Electric Transportation

In maximizing the utilization of abundant nickel reserves, President Joko Widodo encourages Indonesians to switch to using electric vehicles as their daily mode of transportation. This is also supported by the official Presidential Regulation concerning the Acceleration of Motor Vehicle Development. This regulation serves as an essential foundation for the automotive industry players in Indonesia. So that business people can build and develop electric vehicles that are much safer.

Not only the use of private vehicles but public transportation is also expected to be able to optimize electrification. The shift of the function of public transport to electric vehicles has begun to be seen in Jakarta. Such as the presence of electric buses for several TransJakarta fleets. Online transportation service providers, Gojek and Grab also offer the option of electric motorbikes.

The synergy in public and private vehicle sectors presents an excellent opportunity for foreign investors to participate in developing the electric vehicle sector in Indonesia so that the government can create a green economy and Indonesia’s carbon-free initiatives immediately.

Massive EV Outreach to the Public

The Indonesian government, through the National Research and Innovation Agency (BRIN), also provided space to socialize the electric vehicle ecosystem with the Indonesia Electric Motor Show 2022 (IEMS) at the end of September. The presence of this electric vehicle expo also plays a role in informing the part of research and innovation in economic and social development.

The event, which was held at the Jakarta Convention Center (JCC), was enlivened by the names of companies engaged in developing the electric vehicle industry. Wuling and Nissan are big names in the automotive industry that are now consistently promoting innovation in electric cars.

A series of manufacturers of electric vehicles and other lithium-ion batteries, such as motorcycles, commercial vehicles, and bicycles produced locally and in China, also showed their best products. PLN was also present at the IEMS 2022 event to introduce business opportunities for cooperation with the Public Electric Vehicle Charging Station (SPKLU) and the General Electric Vehicle Battery Exchange Station (SPBKLU) for corporations, MSMEs, and individuals.

The presence of IEMS 2022 opens up many business opportunities for participating in developing green economy initiatives in Indonesia. InCorp Indonesia (formerly Cekindo) can assist you in maximizing business opportunities in establishing a company and obtaining related business licenses in Indonesia.

Pandu Biasramadhan

Senior Consulting Manager at InCorp Indonesia

An expert for more than 10 years, Pandu Biasramadhan, has an extensive background in providing top-quality and comprehensive business solutions for enterprises in Indonesia and managing regional partnership channels across Southeast Asia.

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Frequent Asked Questions

There are three things business owners need to consider before setting up a business in Indonesia: the type of business entity, capital requirements, and regulations.

Indonesian regulations separate local companies from foreign companies. Generally, foreign-owned companies (PT PMA) have more limitations than their local counterparts (Local PT). However, to pursue more foreign direct investment in the country, the government has taken several bold initiatives to increase the ease of doing business and provide numerous attractive incentives for foreign investors.

There are two main types, namely, primary business licenses and non-primary business licenses. The primary ones commonly apply to various industries, such as general and industrial business licenses. Additional non-primary ones are included, depending on the operations of your business. Examples of non-primary business licenses are operational and commercial licenses.

Yes, you must apply for it to be able to issue work permits for your foreign employees. This permanent business license is also a prerequisite for the applications for other business licenses and import licenses.