Authors: Muhammad Zulfikar Rakhmat, Dimas Permadi, and Ramadha Valentine
President Joko “Jokowi” Widodo has recently signed a presidential regulation on electric cars. The regulation requires several things, including forming a coordinating team to support the implementation of the electric vehicle programme.
Jokowi hopes that electric vehicles will be able to replace fuel oil vehicles in the near future.
As air pollution in large cities such as Jakarta continues to increase, Indonesia believes that it is important to provide the general public with access to electric cars.
Not only that, but the government also sees the possibility for Indonesia to develop electric cars because the country has the raw materials available. In his statement, Jokowi asserted: “We know that 60% of the key to electric cars is the batteries and we have the components to make them [such as] cobalt and manganese in our country”.
To achieve the aim, the Indonesian government would need to collaborate with other countries. China seems to be on the list.
Although it has still not been confirmed, several reports indicate that China intends to move its electric car companies, namely BYD Auto Co., Ltd and JIC to Indonesia. Moreover, Chinese car manufacturer, Dongfeng Sokonindo (DFSK), also intends to produce DFSK E3 Glory cars in Indonesia to be marketed in the ASEAN region. These news increase the possibility that China will play a crucial role in Indonesia’s plan.
China’s possible involvement in Indonesia’s plan for electric cars could be a reasonable move and may be welcomed by Jakarta. Nonetheless, there is the possibility that it may disrupt Jakarta’s lengthy ties with Japan as its largest partner in the automotive sector.
When it comes to the automotive industry, Indonesia is extremely dependent on Japan. As reported by the Association of Indonesia Automotive Industry, the majority of cars used in Indonesia are Japanese. CNN’s polling also reveals that Indonesians prefer Japanese cars more than those produced by Europe, Korea and China.
Another case which exemplifies the strong automotive ties between Jakarta and Tokyo is the Indonesian-made car, the “Proton” which is a collaboration between Indonesia and Suzuki.
Nonetheless, considering the position of Indonesia as a country that has just moved into the business of manufacturing electric cars, it would most likely involve foreign investors with the best offers.
Besides seeing goods from China as relatively cheaper and of comparable quality, Jakarta views Chinese companies applying for relocation to Indonesia as a serious step to strengthen its intent to assist Indonesia in realising its electric car agenda.
China’s involvement, however, is likely to disrupt the stability of Indonesia’s long-time cooperation with Japan in the automotive industry.
This could be true, especially if we look at how Indonesia has increasingly become a battleground between Beijing and Tokyo, such as in the recent bidding for the construction of a high-speed railway between Jakarta and Bandung. China succeeded in winning the bid, leaving Japan, which worked hard to obtain Indonesia’s approval to participate in the project, feeling incredibly disappointed. The disappointment was expressed by its Chief Cabinet Secretary, Yoshihide Suga.
Considering this, electric cars can be another battleground between Japan and Indonesia.
To this date, it remains unclear whether it will be Japan or China who will have a considerable stake in Indonesia’s move towards electric cars.
Nevertheless, in the midst of the potential rivalry between Beijing and Tokyo, Indonesia should proceed carefully. The government in Jakarta needs to ensure that it does not negatively affect its relationship with both nations and it should consider the interests and opportunities of both parties.
Without careful consideration, Indonesia could lose both of its close partners and find itself increasingly isolated.
The three authors are analysts on Indonesian political economy