Climate and Nature

Moving Indonesia: the multi-stakeholder network building Indonesia’s EV production

EV production is scaling up in Indonesia

EV production is scaling up in Indonesia Image: Photo by Ather Energy on Unsplash

Ririn Radiawati Kusuma
Lead, Moving Indonesia, World Economic Forum
Andrew Daniel Limanto
Fellow, Moving Indonesia, World Economic Forum Geneva
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  • Indonesia plays a crucial role in the electrification of global mobility.
  • Moving Indonesia is a multi-stakeholder collaboration platform designed to unlock electric vehicle production in the country, covering everything from electric two-wheelers to batteries.
  • One of Moving Indonesia's first value-adds is a multi-stakeholder consultation ahead of the electric two-wheeler incentives policy release.

As the largest economy in Southeast Asia, Indonesia is becoming a pivotal country in global electric vehicle (EV) production. It is committed to producing 13 million electric motorcycles and 2.2 million electric cars by 2030. Indonesia has an abundant natural supply of nickel, with up to 52% of the world’s nickel resources. This makes the country a vital asset in the global battery production supply chain.

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Committing to net zero

The government of Indonesia has announced that the country is committed to reducing emissions to achieve its net zero emissions target by 2060 or earlier. One of the steps towards this goal is the electrification of its mobility sector and the country is also attempting to shift its fossil-fuel-based electricity production to renewable energy. The transport sector accounts for 40% of the total energy consumption and 13% of ambient PM2.5 pollution in the country. Boosting EV production in Indonesia should help reduce emissions, lower oil imports and subsidies and make cities cleaner.

The transition to electric vehicles (EVs) has become a key part of Indonesia’s national agenda stipulated through the National Masterplan for Industry (RIPIN) 2015-2035. EV production is the top industrial priority of this Masterplan, as well as the development of a supporting infrastructure plan described in the National Medium-Term Plan (RPJMN) 2020-2024. In detailing its commitment, the Indonesian government enacted Presidential Decree No. 55 in 2019. This sets out the path and guidance for the country’s EV development and adoption.

As in many other emerging markets, large-scale electrification of two-wheelers and public transport buses can lead to early adoption and it lays the foundation for the mass manufacture of electric vehicles.

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Indonesia: a country of two-wheelers

Indonesia has approximately 115 million two-wheel vehicles (2Ws) compared to 16 million four-wheel vehicles (4Ws). Out of all the Indonesian households with a vehicle, 70% own combustion-based 2Ws. Fuel imports and subsidies are a burden on the country’s fiscal situation; combustion vehicles cause pollution in our cities and related carbon emissions harm the planet.

Focused progress on the electrification of mobility, which is increasingly cost-effective, especially for electric two-wheelers (e2Ws) is a logical next step for Indonesia’s mobility transition strategy.

Countries such as China, Vietnam, Thailand and India have found success in their strategies to push for greater EV adoption in this segment. Indonesia can and must do the same by developing its EV production market.

Indonesian industrialisation

Indonesia is the world’s largest producer of nickel ore and a key producer of other minerals crucial for battery production. This gives the country the opportunity to build an integrated ecosystem and create immense economic opportunities. The government is taking various steps to build a domestic refining and supply ecosystem and the private sector is also seizing on this opportunity with investment commitments on the rise.

In line with the government’s ambition to have domestic EV industrialisation, the new socio-economic opportunities created by a new e2W industry could generate Indonesian Rupiah (IDR) 171 trillion in annual economic value, add 215,000 jobs in component and vehicle manufacturing and significantly improve the national trade balance, adding IDR 45 trillion annually by 2030. In the same period, the e2W industry could reduce CO2 emissions by 6.1 million tons annually, helping the move away from fossil fuel dependence and supporting the country’s national targets.

The Indonesian government has identified the significance of growing e2Ws in the country. A recent announcement on plans to subsidise the purchase of an e2W by IDR 6.5 million in 2023 is a great example of this. There is no lack of enthusiasm from the government and private companies towards this transition. The World Economic Forum’s Moving Indonesia task force brings together policymakers and business leaders to enhance collaboration and accelerate this transition.

Announced in Davos in January 2023, the World Economic Forum launched the Moving Indonesia initiative to engage government and business leaders in accelerating the achievement of Indonesia’s national ambition. Moving Indonesia has started its first task force on the policy framework for the acceleration of e2W manufacturing and adoption. This task force consists of various important industry leaders, government stakeholders and think tanks. By providing a platform for dialogue, Moving Indonesia aims to strengthen policies and showcase business leadership to accelerate EV manufacturing and adoption in the country – and make Indonesia a regional leader in this industry of the future.

Discover more about the Moving Indonesia project

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The views expressed in this article are those of the author alone and not the World Economic Forum.

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