Taking on from the meetings held under the rubric of ASEAN chairmanship of Vietnam in the year 2020, the country coordinator for Russia in ASEAN, Indonesia conducted the meeting which reaffirmed the strategic partnership between ASEAN and Russia in January 2021. Under the meeting it was decided that the two sides need to address the implications of COVID -19 and accelerating the recovery from economic and social point of view across the region. The basis of meeting was the new ASEAN Russia comprehensive plan of action for the next four years (2021-2025), and discuss its impact related to political and economic security, industry, science and technology, smart cities, health cooperation, and increasing people to people contacts. Vietnam during its chairmanship has been proactive in developing meaningful engagement between ASEAN and Russia as well as between other dialogue partners.
Russia supported ASEAN centrality in organisational architecture, but a need was felt for further engaging Russia in the regional dynamics. Within January 2021 itself issues related to ASEAN Economic Community were discussed through the video conference. Given the fact that the ASEAN community blueprints have been discussed as well as the template for Asian comprehensive recovery framework has been out lined last year, the meeting as expected deliberated on issues related to communication and information technology, E-Commerce, minerals, science and technology, and innovation. Areas which have been highlighted during the ASEAN meetings last year has been related to the 4th industrial revolution and working out plan of action. ASEAN economies have been impacted by limited domestic demand and therefore recovery of the value chains suffered because of the pandemic. There is a need for post pandemic economic support.
ASEAN faced the biggest challenge with the change of government in Myanmar when military junta took over which has been criticised at global level. There have been calls at international level to address this at the regional organisational level and undertake effective measures so that the military junta should cede power to the democratically elected government in Myanmar. This was seen as a challenge to the ASEAN as military government had taken repressive measures with more than 800 people killed since the military coup. ASEAN took cognizance of the fact that the changes in Myanmar would be detrimental to its cohesive and centrality as well as it would challenge the authority that the ASEAN has in terms of a regional organization. It issued a statement seeking peace and dialogue among parties. In February 2021a meeting was held related to minerals exploitation and developing ASEAN minerals cooperation action plan and its effective implementation. It has been felt that with the ongoing 4th industrial revolution in ASEAN, the demand for critical minerals would rise exponentially. The meeting also commissioned a study which is expected to submit its report by the end of this year.
In the March 2021 ASEAN socio- cultural committee has expressed strong support to Brunei’s chairmanship which espouses for better care, effective preparations, and prosperity in the region. Taking note of the earlier decisions which have been taken during the ASEAN 2020 meetings, the new chair highlighted various proposals which include developing regional responses to emergencies and disasters, youth academy programme, establishing the ASEAN climate change centre, and developing gender understanding among the people of the region. By the end of March, ASEAN India meeting was also held through the video conference in which it was buttressed that there is a need for effective implementation of the new plan of action for 2021- 2025. Stress was laid about the execution of ASEAN-India Fund, ASEAN- India Green Fund and a need was felt to proactively implement all these programmes under the ASEAN India project management. India has contributed USD 1 million to the COVID 19 fund which was appreciated, and views were shared regarding cooperation in medicine, developing vaccines, and cheap pharmaceutical products.
Under the chairmanship of Vietnam last year, it was suggested that ASEAN should prepare for the 4th industrial revolution in a more cohesive way. It was expressed that with the coming of digital economy and new innovations there is a need for comprehensive consolidated strategy which should prepare the region towards the 4th industrial revolution. It suggested that to achieve such a manufacturing revolution there is need for a better regulatory environment, global competitive standards, developing skills and capacity at the same time. The consultative meetings which were held in the last week of April, accepted that there is need for collaborative frameworks, creating the ecosystem which is required for achieving such a goal.
In early May ASEAN discussed issues related toCOVID-19 impact, transformation of global value chains and how the organization should accept the post recovery phenomenon for the long term. The workshop also addressed the hindrances about global value chain and what exactly are the opportunities which will emerge in the post pandemic recovery. It was suggested that there is need for developing critical infrastructure, addressing gaps in connectivity, and seriously undertaking measures for human resource development. What is surprising this year is the fact that ASEAN failed to raise issues related to the South China Sea very vociferously and how China has been asserting its maritime claims in the region. Even though there have been constrained statements in this regard.
Vietnam, on its part, has been proactively engaging ASEAN dialogue partners -Japan, India, Russia and the US in developing long term strategic partnership, and the new Vietnamese foreign minister updated the developments in South China Sea. ASEAN as an organization has been engaging the new partners such as Chile and Cuba. Vietnam has also been drawing attention to the activities of numerous Chinese vessels in Ba Dau(Whitsun reef ) and it was stated by the spokesperson of the Ministry of Foreign Affairs of Vietnam that the activities of the Chinese vessels violate Vietnam sovereignty and the provisions of the UNCLOS as it goes against the spirit of the Declaration on the Conduct of Parties in the South China Sea(DOC). At the international level during the press conference which was conducted in April 2021 on the issue of South China Sea, Vietnam foreign office clearly remarked that all countries should maintain peace and stability as well as cooperation in the South China Sea and must comply with the international law.
All the discussions which happen this year were a carryover from the discussions which were held in November 2020, and it means that the issue related to politico-security and socio-cultural communities would gain more momentum in coming years. The ASEAN meetings in 2020 has laid out the template and suggested new ideas which would bring the ASEAN economies together and develop blueprint for E-commerce, digital economy, digital connectivity, promoting finance, trade and investment in the region. The issues and the engagement with dialogue partners is expected to start in May 2021 and Brunei will have to undertake effective measures so that the momentum of ASEAN discussions is maintained.
Management of Nuclear Mining in Indonesia
Nuclear energy in its development is very rapid and plays a major role in improving the quality, as well as the added value of various products in various activities to improve people’s welfare. In accordance with its nature, nuclear energy has two impacts, namely: the side of benefits to realize welfare; and on the other hand, it has potential hazards that must be managed properly. Based on this, Nuclear Mining Material as one of the strategic natural resources is a vital commodity that controls the lives of many people, must be controlled by the state with optimal management in order to obtain the maximum benefit for prosperity and welfare of the people as mandated in the 1945 Constitution Article 33 paragraph (2) and paragraph (3). Therefore, the use of nuclear technology for human life needs to be monitored and regulated with regulations that consider the value of benefits and potential radiation hazards caused.
In order for the use of nuclear power to be optimized, it is necessary to make regulations that regulate utilization governance and prevent bad things from happening due to radiation hazards as a consequence of nuclear utilization containing radioactive substances and nuclear materials. Law Number 31 of 1964 concerning Basic Provisions of Atomic Energy is one of the first steps to strengthen nuclear power in Indonesia by means of Institutional Strengthening that utilizes (1) nuclear materials such as uranium and other radioactive materials, (2) reactor development and reactor utilization for electricity, and (3) utilization and development of radioisotopes in aspects of health, agriculture, industry, and others. Then, since 1978 has ratified several international agreements including:
- Law Number 8 of 1978 concerning the Ratification of the Treaty on the Prevention of the Spread of Nuclear Weapons;
- Law Number 9 of 1997 concerning the Ratification of the Treaty on the Southeast Asia Nuclear Weapon Free Zone ;
- Law Number 1 of 2012 concerning the Ratification of the Comprehensive Nuclear-Test-Ban Treaty.
- Law Number 10 of 2014 concerning the Ratification of the International Convention for Suppression Acts on Nuclear Terrorism.
Indonesia does have Law Number 10 of 1997 concerning Nuclear Power. However, there are still many provisions that have not been regulated and provisions that do not keep up with the times along with the development of nuclear power in the world of science and technology. In fact, the elements contained in nuclear have not all been used by Indonesia and there are still illegal buying and selling practices to date. Whereas nuclear elements, such as monazite, contains U (0.1-0.3%), Th (± 6%), LTJ (60%), and phosphate. LTJ has enormous benefits and its supply is currently dominated by China. Based on the records of the Ministry of Industry, every production of 1 ton of tin is estimated to produce 22 kg of monazite, which means that 34,000 tons have been produced monazite in the last 17 years (there are 2000 tons of thorium and 170 tons of uranium). If there is a regulation related to this, it will certainly ensure legal certainty and governance, and this can be a huge economic potential for the country.
At this time nuclear energy has contributed about 11% of the world’s energy and there are 452 nuclear reactors actively operating and spread across 31 countries in the world with a total capacity of 399,354 MW. Each year it is estimated that more than 66,883 tons of uranium are needed to run these reactors. Now as many as 54 new reactors are being built in 19 countries, and it is estimated that by 2035 the world’s uranium demand will increase by about 30% to 72,000-122,000 tons. The existence of NZE (Net Zero Emission) targets by many countries, mostly by 2050, and only a few countries by 2060, causes the possibility of projected nuclear power plant construction to increase.
Indonesia is one of the countries that has committed to achieving the Net Zero Emission (NZE) target by 2060 through Presidential Regulation No. 98 of 2021 concerning the Economic Value of Carbon based on the principles of welfare and the principles of sustainable development. The consequence of setting this target is that Indonesia must gradually reduce the use of fossil energy sources and replace them with clean energy sources derived from new and renewable energy, with the aim of national interest and preservation of national functions for the sustainability of future generations.
Based on exploration data that has been carried out by BATAN (National Nuclear Energy Agency which has now merged into the National Research and Innovation Agency, Indonesia has the potential for Uranium and Thorium (elements of nuclear used) in the Kalan and Ketapang (West Kalimantan areas), Kawat (East Kalimantan), Katingan, Mentawa and Darab (Central Kalimantan ), Singkep (Kepulauan Riau), Bangka Belitung, Sibolga (Sumatera Utara) and Mamuju (Sulawesi Barat). If Indonesia can take advantage of the opportunity for these natural resources for national development and community welfare, then Indonesia can contribute as a supplier of nuclear mining materials later. The International Energy Agency (IEA) 2021 projects that by 2040 there will be an increase in the number of nuclear power plants that are likely to exceed the projected supply of uranium in the same period (World Nuclear Association, 2021). This is likely to have an impact on competition among nuclear power plant managers to get a guaranteed uranium supply.
Based on data owned by BAPETEN (Nuclear Energy Supervisory Agency), export and import activities for nuclear materials, in 2017 there were imports of 28.08 kg, in 2018 as much as 28.14 kg, and in 2019 as much as 41.69 kg. In Law No. 7 of 2014 concerning Trade there is no specific regulation on trade related to nuclear power. Whereas in the field of nuclear power also cannot be contained export and import activities, as well as their prohibitions and restrictions. Given that the Indonesian state has limited fulfillment of the needs of nuclear materials and radioactive substances that must be met from domestic production, export, and import activities, as well as the possibility of re-export of used sources are very potentially needed as a gateway to traffic between countries. In Law Number 6 of 2023 concerning the Stipulation of Government Regulations in Lieu of Law Number 2 of 2022 concerning Job Creation into Law, there are regulations related to the mining of nuclear-excavated materials. This arrangement partially deleted several articles of Law Number 10 of 1997 concerning Nuclear Energy, partly added new articles and partially replaced existing articles. However, unfortunately, the two laws have not explained specifically related to regulations regarding the licensing of exports and imports of nuclear-excavated materials directly related to nuclear materials and radioactive substances.
The problem faced by Indonesia today is that there is no positive law that can reach the development of scientific and technological advances related to nuclear power and has not been able to meet the needs of nuclear power safety, security, and facility arrangements. Then, there is no special criminal regulation to ensnare all forms of action faced related to the misuse of nuclear materials, radioactive substances, and ionizing radiation plants that can threaten the life of the nation, state, and society.
If the legal legitimacy of the management of nuclear mining already exists, it is not impossible that the use of nuclear power will increase in various sectors, especially in mining, radioactive mineral processing, nuclear energy, energy storage, and radioactive mineral-based batteries. National competitiveness as a positive impact of nuclear technology can also be stronger. In addition, Indonesia’s radioactive mineral-based natural resources can be utilized optimally, then business actors are potentially increasingly interested in investing in the nuclear industry, and public safety and security from radiation hazards are guaranteed. Absolutely, taking into account the balance of existing living environments, while maintaining the environment despite nuclear mining activities. This is also a demand against nuclear mining companies that must meet the provisions in Law No. 32/2009 on Environmental Protection and Management.
The author hopes that this paper can contribute to the preparation of laws and regulations on the management of nuclear mining materials so that Indonesia immediately has a legal rule for nuclear mining activities, as well as complementing Government Regulation Number 52 of 2022 concerning Safety and Security of Nuclear Mining which was published earlier.
Behind the cancellation of Tesla’s investment in Indonesia
Authors: Yeta Purnama and Wulan Fitriana*
In April 2022, the issue of Tesla’s interest in investing in Indonesia attracted the attention of the domestic public, following a meeting held by Elon Musk, the owner of a prominent electric car company, with the Coordinating Minister for Maritime Affairs and Investment Luhut Binsar Pandjaitan. The meeting discussed nickel raw materials for the electric car supply chain.
This was then followed up directly by President Jokowi during the implementation visit to SpaceX in May 2022. During the visit, they also did not reach an agreement, although in August 2022 Luhut said the value of the nickel purchase contract from Tesla reached US$ 5 billion or the equivalent of IDR 74.5 trillion. However, until mid-2023, an official agreement on Tesla’s investment plans had not yet been announced.
Instead of setting investment in Indonesia, recently Tesla was even rumored to be opening an electric car factory in neighboring Malaysia. Even though Indonesia has been intensively lobbying with a nickel concession offer to Tesla, the offer does not seem convincing enough to involve Indonesia in fulfilling the supply chain for battery raw materials at the company. For Tesla, a sustainable company comes first Environmental, Social, and Governance (ESG) is the main reason to be considered. However, on the other hand nickel companies in Indonesia are still far away from being sustainable. This can be interpreted that one of the reasons for Tesla canceling its investment is because the company’s concern for ESG is still low.
Battery production ecosystem which is not sustainable
As a company that owns track record Pretty good ESG with shoes total 65/100 according to disclosure Refinitiv, there are at least two reasons why Tesla has not provided further information or even thwarted its intention to make Indonesia an investment destination. The first reason is regarding the poor production ecosystem. Several nickel mines in Indonesia have not even been included in the ESG rating agency which is an important aspect to attract international investors concern to climate change.
Second, half-hearted regulations in an effort to reduce emission reductions. For example, by perpetuating nickel mining companies meet energy needs by using coal-fired power plants to support smelter activities. The emission footprint in fulfilling the electric vehicle supply chain is a false solution for the government to reduce greenhouse gas emission reductions.
This is exacerbated by company non-compliance with regulations, one example is the downstream policy. It is known that illegal export of nickel ore occurred due to the export ban and required the process of refining nickel in the country. This fraud was also influenced by differences in the price of nickel ore at home and abroad. Miners tend to choose exports because the price of nickel ore in the domestic market tends to be lower than the export price.
This activity is known to have caused losses to the state due to loss of royalties and export duties from companies.
Even though the government has issued regulations as stated in the Minister of Energy and Mineral Resources Regulation Number 11 of 2020 concerning the Third Amendment to the Regulation of the Minister of Energy and Mineral Resources Number 07 of 2017 concerning Procedures for Setting Benchmark Prices for Sales of Metal Minerals and Coal. However, this has not been implemented properly in the field.
Based on the results of the 2021 evaluation, it shows that among the 73 companies, there are smelters, miners, and trader, there are as many as 65 companies that have been assessed according to the HPM, the rest are still not in accordance with the stipulated HPM and are even still under international regulations.
What needs to be done in the future
Inviting Tesla to become a net investor in the country is a fairly good effort from the government in diversifying cooperation partners, despite its dependence on investment from China which is quite problematic in the environmental and governance sectors. However, there are several things the government needs to do in the future to attract foreign investment, especially in maximizing the management of nickel resources in the country. First, it is necessary to carry out policy reforms that are truly serious in the energy transition effort.
One of them concerns the application of Risk-Based Licensing mandated by the Job Creation Law. This bill is not supported by the availability of a database on risk mapping, while environmental permits have been abolished, resulting in threats to environmental quality degradation.
Second, the government needs to retire dependence on fossil energy as early as possible, by starting a mix of energy transitions more quickly, including overcoming over supply electricity must pushed with policy. Because, currently the policies made by the government in making a road map for the transition of new energy and renewable energy in the EBET Bill are still half-hearted and there are still many fake solutions in the bill, for example such as geothermal and coal gasification which are actually efforts to extend the life of dirty energy in Indonesia. domestic.
Third, the government needs to carry out strict supervision and proper regulation. Especially regarding environmental and governance issues which are important aspects to create a more sustainable corporate ecosystem. Because of ideals net zero carbon will not be achieved effectively without involving a number of parties and stakeholders.
*Wulan Fitriana, Researcher at CELIOS.
ASEAN needs to walk a tightrope
The Quad leaders’ statement clearly reiterated the importance of the Association of South East Asian Nations (ASEAN) in the context of the Indo-Pacific. Said the statement:
“Today we reaffirm our consistent and unwavering support for ASEAN centrality and unity. We are committed to ensuring the Quad’s work is aligned with ASEAN’s principles and priorities and continues to support implementation of the ASEAN Outlook on the Indo-Pacific (AOIP)”
The statement also referred to Indonesia’s chairmanship of ASEAN in 2023.
This statement is important for several reasons. First, there have been differences between ASEAN and the US with several ASEAN leaders expressing concern over the consistent deterioration in ties between China and the US. Countries like Singapore have repeatedly reiterated, that they would not like to make choices between Beijing and Washington, since they share robust economic ties with both countries.
At the Boao Forum, often referred to as China’s Davos, held in March 2023, the Singapore PM again underscored the global ramifications of strained ties between China and the US. The Malaysian PM, Anwar Ibrahim perceived to be pro-US, expressed concern over US’ ‘decoupling’ from China.
Second, ASEAN countries which also share close economic links with the US have recently begun to speak about ‘De-dollarisation’ which refers to reducing dependence upon the US dollar for trade. The Malaysian PM, Anwar Ibrahim also spoke about Asian Monetary Fund (this idea was initially mooted by the Malaysian PM in the late 1990’s when he was Malaysia’s Finance Minister). Like many other regions, ASEAN is wary of US’ increasingly insular economic policies in recent years. While seven Asean countries — Brunei, Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam – are part of the US led IPEF (Indo Pacific Economic Framework) they have complained about IPEF not having a trade component.
Third, Indonesia has taken a different stance from the west on the Russia-Ukraine war. Like India, which is the current chair of G20, Indonesia too has pointed to the need for addressing disruptions caused to the global supply chains by the Russia-Ukraine war. Yet, it is an important stakeholder in the Indo-Pacific and is also important in the context of the goal of reducing economic dependence upon China and altering global supply chains. Apart from Vietnam and India, Indonesia has been one of the favoured countries for companies seeking to re-locate from China.
In spite of all the above differences, several ASEAN states have begun to show greater interest in the Free and Open Indo-Pacific. ASEAN came up with its first Indo-Pacific vision in 2018, but it has clearly stated that it’s approach vis-à-vis the Indo-Pacific is different from that of the US and not targeted at China. In recent months however, some ASEAN countries have begun to express their discomfort with regard to China’s increasingly aggressive behaviour on the South China Sea issue. Philippines, a US ally, which had in recent years been trying to strike a balance between US-China, has once again strengthened security ties with US. In February 2023, Philippines provided the US military access to four more military bases in the ASEAN nation. The US defence department while commenting on Philippines decision to grant access to four more military bases said that this:
“will make our alliance stronger and more resilient, and will accelerate modernization of our combined military capabilities,”
In conclusion, the ASEAN grouping is very important in the current geopolitical context and while it needs to walk a tightrope between China and the US it is an important player in the context of the Indo-Pacific for several reasons. As mentioned earlier, ASEAN countries are especially important in the changing economic architecture, where many western countries are seeking to reduce their dependence upon China and many US firms are expanding their operations in ASEAN countries – especially Vietnam. Apart from this, several ASEAN nations do not want to adopt a confrontationalist stance with Beijing due to their economic interests as well as geographical proximity but are not comfortable with China’s assertive behaviour and thus need to find common cause with the Quad.
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