This Week’s Headlines (28 Jan - 3 Feb 2023)

03 Feb 2023


  President Jokowi "confident" Tesla will invest in Indonesia 


  Indonesian President Joko Widodo is confident Tesla Inc. will finalize a deal to invest in a
  production facility in his country, having offered the U.S. car maker incentives ranging from tax
  breaks to a concession to mine nickel. 


  Southeast Asia's largest economy has been wooing Tesla to invest in battery and car
  manufacturing since 2020, seeking to leverage its rich reserves of nickel ore, which can be
  processed for use in EV batteries. 


  The president, widely known as Jokowi, has held talks with Tesla Chief Executive Elon Musk twice,
  meeting him in person at his SpaceX facility in Texas last year and a telephone call, to try to
  secure a deal. 


  "I said to him that if you invest in Indonesia, I will give the concession of nickel," Jokowi said,
  referring to Indonesia's offer of a mining concession. 


  Other incentives include tax breaks and a subsidy scheme on EV purchases to build a market for
  Tesla in the world's fourth most populous country, he said, adding that his ministers were finalizing
  the subsidies. 


  The president said he was "confident" Indonesia had the edge over other countries Tesla might be
  considering for investment because it has the largest nickel reserves and a big domestic market. 


  Jokowi said it was up to Tesla to take up the offer to mine nickel, underlining that Indonesia is open
  to investment in the EV battery and electric car supply chain. "If they want to start from EV battery,
  it's OK," he added. 


  Tesla did not immediately respond to a request for comment. 


  Tesla is looking for an additional manufacturing hub. The company currently manufactures EVs in
  four locations: Fremont, California; Shanghai; Austin, Texas and outside Berlin. Analysts estimate
  that Tesla would need to build seven or eight more “gigafactories” to meet Musk’s target of selling
  20 million electric vehicles by 2030. 


  In addition to Indonesia, South Korea, Canada and Mexico have been vying for Tesla to invest in
  manufacturing. A spokesman for Mexico’s president said on Tuesday that Tesla was considering
  setting up an assembly plant near a New Mexico City airport. 


  Analysts have said Mexico could have an edge to win the Tesla investment because of the
  proximity to its main market in the United States, an established supply base for components and
  because vehicles built there could qualify for Biden administration consumer tax credits. 




  If Tesla were to invest in battery production in Indonesia, it would be its first facility of that kind in
  Asia. Last month, the company announced a $3.6 billion investment to expand battery production
  at its Nevada factory. 


  Jokowi banned the export of nickel ore in 2020 to encourage investors to build a vertically
  integrated supply chain for batteries and EV, using the metal as a raw material. 


  The ban has brought in big investments in nickel smelting, mostly from China, but has also been
  challenged at the World Trade Organization by the European Union, which says the ban was
  unfairly harming its stainless steel industry. 


  The WTO last year ruled in the EU’s favor but Indonesia is appealing. 


  Indonesia has also seen rising interest in investment in EV or battery production, with South
  Korea's Hyundai Motor Co. and LG Energy Solution already building EV and battery plants. 


  Indonesian officials last year said Tesla has signed contracts worth about $5 billion to procure
  materials for their batteries from nickel processing companies. 


  Source: Reuters




  Jokowi to declare ban on raw copper exports this year 


  President Joko Widodo (Jokowi) stated that he would shortly announce a policy to halt the exports
  of raw copper following similar steps already taken for nickel and followed by bauxite in June 2023. 


  "I already informed in December that bauxite export would be stopped in June 2023. I will soon
  announce the decision to stop copper export this year," he noted as a keynote speaker at the
  2023 Mandiri Investment Forum in Jakarta, Wednesday. 


  He explained that the decision to stop copper exports was based on the results of his review of
  the progress in the construction of a smelter owned by PT Freeport Indonesia in Gresik, East
  Java, as well as other similar facilities also being built in West Nusa Tenggara (NTB). 


  "The progress in smelter construction in Gresik and NTB had reached more than 50 percent.
  Therefore, we are ready to stop copper export," he remarked. 


  The president also reminded that Indonesia is now the majority owner of PT Freeport Indonesia's


  "Do not think that Freeport still belongs to the United States. We already have the majority
  shares," he emphasized. 


  Jokowi had earlier imposed a nickel ore export ban in January 2020 and spoke at length on the
  myriad benefits of this policy. 


  According to the head of state, downstreaming has created a significant jump in value from the
  Indonesian nickel mining industry, from earlier only around US$1.1 billion to around US$30-33
  billion in 2022. 


  "Imagine the value increased from Rp17 trillion to Rp405 trillion. What an enormous added value,"
  he disclosed. 


  This policy was then sued by the European Union at the World Trade Organization (WTO) and
  Indonesia was declared to have lost the case. 


  However, Jokowi emphasized that the defeat was not the end, as Indonesia could still submit an
  appeal. On the other hand, the initial policy of banning exports has been accompanied by the
  ongoing development of downstream industries. 


  "If we lose after the appeal, we must keep going because the downstreaming industry and the
  ecosystem have been made. Do not give up on this," he stated. 


  The president also entrusted the banking world to play an active role in overseeing the mining
  downstream policy, one of which is by providing convenience for credit application intended for
  smelter construction. 


  Coordinating Minister for Economic Affairs Airlangga Hartarto, Coordinating Minister for Maritime
  Affairs and Investment Luhut Binsar Pandjaitan, and State-Owned Enterprises Minister Erick
  Thohir also accompanied the president at the event. 


  Source: Antara  




  UK to provide $1.25b in MRT as it dubs RI ‘powerhouse’ economy 


  The United Kingdom government will make available US$1.25 billion for the development of the
  MRT Jakarta project with the possible involvement of Crossrail International, Mott Macdonald and
  six other undisclosed UK companies. 


  UK minister for exports, Andrew Bowie, told The Jakarta Post on Thursday that these eight
  companies had highly relevant experience based on their participation in the development of
  British rail networks. 


  “[Crossrail International and Mott Macdonald] delivered the Elizabeth Line, which has transformed
  commuting across London, and we want to see the same happen here with the MRT,” said Bowie. 


  The $1.25 billion in export credit guarantees from UK Export Finance was agreed upon in
  November last year at the Group of 20 Summit in Bali, and Bowie confirmed that it was part of
  the UK government’s commitment to making 4.5 billion pounds ($5.4 billion) available for
  investment in Indonesia. 


  Bowie declined to divulge what the rest of the funds might be used for, explaining that it was up to
  the private sector to assess the opportunities. 


  “It’s up to the projects in Indonesia to make it known to us that [a specific project] is going ahead,
  so we can say to UK companies: ‘Look, there're chances out here, we've got this money that can
  support you, let's go into it,’” said Bowie. 


  The minister added that the UK government saw Indonesia and the Southeast Asian region as “the
  area for growth in the world right now”. 


  He emphasized that Indonesia’s economy was “the real powerhouse” and that London’s “overseas
  growth agenda” was to build trust in UK companies to develop and deliver infrastructure projects

  across the archipelago. 


  “The UK wants to be a part of [Indonesia’s economic growth], and we are not where we should be.
  We should acknowledge that UK companies, UK business should be a lot more involved in
  Indonesia than we are [now],” he said. 


  UK companies had expressed interest in the LRT project as well, said Bowie. 


  Source: The Jakarta Post