Chairman Of Kadin Urges US To Be Fair To Indonesia About Nickel Subsidies For Electric Vehicles

Nickel illustration (Photo: Doc. Antara)

JAKARTA - Chairman of the Chamber of Commerce and Industry (Kadin) and the ASEAN Business Advisory Council (ASEAN-BAC) Arsjad Rasjid urged the United States to be more fair in providing green subsidies for minerals for electric vehicles.

The US government is known to issue tax credit guidelines for battery and EV manufacturers under the Inflation Reduction Act in the next few weeks. The law covers $370 billion in subsidies for clean energy technology.

According to Arsjad, batteries containing components sourced from Indonesia are feared to remain ineligible for the full Inflation Reduction Rate (IRA) tax credit. This is because Indonesia does not yet have a free trade agreement with the US and the dominance of Chinese companies in the nickel industry.

"I express my concern over the 'purification' of critical minerals in Indonesia from the United States (US) subsidy package for green technology," he said in a written statement, quoted Wednesday, April 5.

Meanwhile, Arsjad emphasized that Indonesia could play an important role in meeting the needs of the United States for electric and battery vehicles.

This is because Indonesia has a third of the world's total nickel reserves that put Indonesia in first place and nickel is an important ingredient for the production of electric vehicle batteries.

Indonesia itself, he said, is working with multinational companies to build separate nickel supply chains for China and other countries. "Indonesia is a friend to China and the west. We provide important minerals for China, the United States, and the European Union," said Arsjad.

Arsjad assessed that Indonesia has made efforts to ensure that it has an inclusive portfolio of both China and other countries in the nickel mining sector. This, according to him, is in order to reach a fair and mutually beneficial trade agreement.

He said that various countries have invested in Indonesia in the mining sector, especially for the development of electric vehicles and batteries. These investors include LG, SK Group, Samsung, and Hyundai.

Furthermore, said Arsjad, the three investors are important in downstreaming the nickel industry, including cathodes, battery cells, and vehicle production. He said, LG Energy Solution is now building an electric vehicle battery factory in Indonesia with electric car manufacturer Hyundai.

In addition, Arsjad also emphasized the importance of seeing Indonesia and ASEAN as alternatives to China. He hopes that the United States will provide equal status to members of the Indo-Pacific Economic Framework (IPEF) with countries that have full free trade agreements with the United States.

"We are discussing the IPEF, and the spirit of the agreement is cooperation. If America excludes ASEAN, it feels very unfair," he said.

In the electric vehicle development industry, Arsjad admitted that he invited the Americas and the European Union to put their trust in Indonesia and other ASEAN countries.

The chairman of the Chamber of Commerce and Industry is optimistic that the regions of Indonesia and ASEAN will become strategic partners for the United States, the European Union, and China in the clean energy sector of the electric vehicle supply chain.

"This step is expected to strengthen economic and political relations for ASEAN to the global, as well as provide benefits for the Indonesian industry and economy as a whole," he said.