Following on from the SMMT Webinar focusing on automotive in Indonesia, November’s SMMT International Newsletter features guest writer Efrizal Saputra from the Department for International Trade in Jakarta
ASEAN is foreseen to become a popular destination for foreign direct investments and is projected to be the fourth largest economy by 2030. Indonesia itself contributed 34.5% of the region’s GDP in 2019, followed by Thailand, the Philippines, and Singapore. The country is a growing market providing big opportunities for businesses.
Indonesia is beyond Jakarta and Bali. It is the world’s fourth largest populated country where the urbanisation in the second and third tier cities happened rapidly. Having more than 17,000 islands makes transportation the priority for connecting people and places. There are 34 commercial airports operated by Angkasa Pura I and II, although the central and provincial government collectively manages 317 airports. The 8,529 km of rail lines have been developed mainly in Java and Sumatra with 12,134 rolling stock operating across it. A total of 233,420 fleets nationwide serves city transportation. Private vehicles are also growing and recorded a total 15.8 million of registered cars and 115.29 million registered motorbikes in 2020.
Globally, the development of electric vehicles (EV) shifts the transportation sector. In Indonesia, this game changing, low-carbon emission technology has just started. The new ecosystem is being developed:
(1) The supportive policy would have been a driver of EV adoption – the Government of Indonesia has set some regulations covering the EV’s roadmap and battery acceleration, charging station, import, taxes, and incentives.
(2) EVs should be more affordable and attractive to people – while the battery remains an expensive component for EV production, Indonesia Battery Corporation is preparing an ambitious plan to become a global supply chain by manufacturing it locally.
(3) The availability of vehicle models and infrastructures such as charging stations and after-sale service centers. Hyundai is the first company to set up an EV factory in Indonesia, followed by Japanese automotive giants who pledged new investments in hybrid car production. On public transportation, Jakarta and Bali have identified the need for 10,000 and 200 e-buses. Meanwhile, Bandung and Surabaya will roll out a pilot project of e-bus soon. The 10,000 charging stations will be built by 2030 too.
The opportunity is not only about procuring the vehicle itself but the local assembly facility, EV component supply chain, charging infrastructure, waste management technology, R&D and capacity building to prepare people and industries’ readiness. The possible improvement in the future shall then include renewable energy storage and source of electricity to power/ charge the vehicles and fast charging technology.
It’s still early days for adopting EV in Indonesia. However, the opportunity for supporting its development is huge. The international firms that have seen success in Indonesia have an on the ground presence and demonstrate persistence, perseverance, and pushiness in their approach. Rather than waiting until the right opportunity comes, handling the opportunity right would be much better. Yesterday, Indonesia might not be your potential market, but it is a market to check out today because tomorrow will be too late.
Click here to hear more from Efrizal Saputra on the SMMT Webinar: Automotive in South East Asia – Indonesia and Thailand.
About the Department for International Trade in British Embassy Jakarta
Representing the UK Government, we develop the partnership to promote trade and investment agenda between the UK Indonesia. Our team supports UK businesses to grow here in key sectors including infrastructure, renewable energy, healthcare, education, defense and digital innovation. Should you be interested, please speak to us.
Efrizal Saputra
Trade and Investment Manager (Infrastructure) for the Department for International Trade in Jakarta, Indonesia
