LG Together With Pertamina And Friends Are Working On A Giant Project For A Rp.142 Trillion Electric Vehicle Battery Factory

Illustration. (Photo: Unsplash)

JAKARTA - The Investment Coordinating Board (BKPM) together with the Ministry of State-Owned Enterprises (BUMN) and related Ministries / Agencies, officially pressed cooperation with the South Korean LG consortium for a giant and strategic investment project in the integrated electric vehicle battery cell industry.

The signing of a Memorandum of Understanding (MoU) with LG Energy Solution in Seoul, South Korea on December 18, 2020. The signing was witnessed by the South Korean Minister of Trade, Industry and Energy Sung Yun-mo.

BKPM Head Bahlil Lahadalia said the investment plan value of this project reached US $ 9.8 billion or equivalent to Rp. 142 trillion (exchange rate Rp. 14,500).

"Indonesia will soon have the center of the world's first integrated electric vehicle battery cell industry. The development of this industry will be carried out by the electric vehicle (EV) battery company from South Korea, LG Energy Solution Ltd in collaboration with a consortium of BUMN," he said in a statement. press conference, Wednesday, December 30th.

Bahlil said that the investment value which reached IDR142 trillion was an extraordinary achievement. In fact, based on BKPM's records, there has been no investment in the post-reform period of this value.

"Where in the pandemic era, almost a few countries have opportunities like this. Even in the pandemic era, there is a lot of interest from investors here," he explained.

Furthermore, Bahlil said, in this project the BUMN consortium involved was the MIND ID Mining BUMN Holding (Inalum), PT Aneka Tambang Tbk (ANTM), PT PLN (Persero), and PT Pertamina (Persero).

To note, this investment cooperation project is the result of a follow-up meeting between President Joko Widodo (Jokowi) and President Moon Jae In in Busan in November 2019.

Some of the projects will be located in the Integrated Industrial Zone (KIT) Batang, Central Java, which President Jokowi reviewed at the end of last June. This 4,300 ha industrial estate is a pilot for the cooperation between the government and BUMN in providing competitive land in terms of price, connectivity and labor.

The plan, said Bahlil, is that some of the batteries produced from this project will be supplied to the first electric car factory in Indonesia which already exists and will soon start the production stage.

According to Bahlil, the development of an integrated electric battery industry is a concrete step in accordance with President Jokowi's target to encourage economic transformation towards an advanced Indonesia by 2045. Downstream mining is one form of this transformation.

"Indonesia will move up from a producer and exporter of raw materials to becoming an important player in the world supply chain for the electric vehicle battery industry, where batteries play a key role, making up 40 percent of the total cost of building an electric vehicle," he said.

In the realization of project investment, said Bahlil, this joint venture will prioritize cooperation with national entrepreneurs, national entrepreneurs in the regions and local small and micro enterprises (UKM) that have the capability and capacity in each supply chain. Thus it is hoped that it can drive the national economy which has a positive impact on the regions.

"So, this investment will become a complete collaborative model involving foreign companies with global reputation, capable BUMNs, and strong national / regional private economic players," he said.