Nandito Putra, Jakarta – Fathul Nugroho, deputy chairman of the Indonesian Association of Energy, Mineral, and Coal Suppliers (Aspebindo), considers LG Energy Solution's (LGES) decision to cancel its US$7.7 billion electric vehicle battery project a critical reminder for Indonesia not to rely on a single investment partner. He emphasized the importance of strengthening the downstream policy and expanding strategic partnerships with other countries.
"LGES's decision to withdraw from the Titan Project is a reminder that Indonesia must not depend on a single partner. Our bargaining power and downstream policy must be reinforced through domestic investment independence and by partnering with other countries such as the United States and European nations," Fathul told Tempo on Tuesday, April 22.
The investment plan was initially a collaboration between LGES and Indonesia Battery Corporation (IBC) – a partnership was designed to cover the entire battery supply chain, from nickel processing to cell production.
According to Fathul, the project's cancellation not only hampers the target for domestic EV battery production but also risks delaying the transfer of strategic technology. "Missing the chance for technology transfer in this high-value sector could deepen our dependence on imports," said Fathul.
The reason, he said, is because the ability to process precursors and cathodes is a key element in increasing the added value of Indonesia's minerals. Fathul also warned that LGES's move may affect foreign investors' perception of Indonesia, which is currently competing with Thailand and Vietnam in attracting EV sector investments.
He noted that policies such as the Inflation Reduction Act in the United States have played a role in redirecting investment, as they offer substantial incentives to battery manufacturers operating within their borders. "This has shifted the global competitive landscape. Therefore, the Ministry of Investment and Downstreaming, along with the Downstream Task Force, must strengthen economic diplomacy with target countries and prepare competitive supporting infrastructure," he stated.
To anticipate long-term impacts, Aspebindo proposed five strategic measures. First, expand investment partnerships, including revisiting talks with companies from the United States and Europe such as Tesla, Eramet, and Bosch, by offering more attractive fiscal incentives. Second, simplify regulations, from land procurement to the acceleration of supporting permits.
Third, strengthen synergy among the government, state-owned enterprises, and the national private sector. "IBC needs to be more aggressive in forming joint ventures by partnering with major national private firms, allowing for technology and intellectual property rights to be acquired through pooled funding," said Fathul.
Fourth, Aspebindo proposes a special allocation of 20 percent from the Non-Tax State Revenue (PNBP) from minerals and coal – which is estimated to reach Rp37 trillion to Rp40 trillion annually – to support the acceleration of downstreaming. These funds are proposed to be used for the development of battery technology and industrial infrastructure, under strict oversight from the Downstream Task Force.
Fifth, utilize the surplus electricity from the 35,000 MW program for battery industry zones with special tariffs, along with optimizing trade diplomacy to address the 32 percent import tariff on batteries imposed by the United States.
Despite the loss of a major investor, Fathul stressed that nickel downstreaming remains a national priority. "Our nickel potential is extraordinary. The key lies in policy consistency and technological self-sufficiency," he said.