Economists: Nickel And Battery Industries For Export-Oriented Electric Vehicles Will Make A Significative Contribution To Indonesian Economic Stability

Illustration. (Photo: Doc. Antara)

JAKARTA - Citi Indonesia's Chief Economist Helmi Arman assesses that the development of the export-oriented nickel and electric car battery industry will have a significant contribution to Indonesia's economic stability. " “ The entry of investment in the basic metal sector and electric car batteries has the potential to improve the structure of the trade balance to increase Indonesia's debt rating even though in terms of maintaining exchange rate stability, differential policy interest rates must still be considered," he said in a written statement in Jakarta, quoted from Antara, Thursday, November 3. Helmi conveyed that based on a Citi Research study entitled “Indonesia ’s EV battery venture: Harnessing the economy ’s growth potential ” published last September, Indonesia is strengthening its position in the global supply chain for basic metals and electric car batteries. This will strengthen the foundation of Indonesia's economic growth, so it needs investor attention. “ It is interesting that the balance in the foreign exchange market since late 2020 has been relatively maintained, although there has been great pressure due to the withdrawal of foreign funds from the Indonesian bond market after the withdrawal of monetary stimulus and the increase in interest rates in America,” he added. The improvement in the foreign exchange market structure for the past two years, he continued, was contributed by the high price of other export commodities such as coal and palm oil. However, the role of basic metal exports is also significant and will continue to increase. In Citi Indonesia's study, it was said that in the next three years, the contribution of basic metal exports and electric car batteries to Indonesia's trade balance is estimated to reach up to 3 percent of Indonesia's Gross Domestic Product (GDP). "If the dependence of the foreign market on supply from foreign funds to the capital market can be lowered, along with the growing supply of foreign exchange results, Indonesia's debt rating has the opportunity to increase from BBB to BBB+," he said. Helmi is also optimistic that Indonesia will still be able to shine with the development of new export sources, when many other countries face the prospect of reducing exports and structural economic growth. "In the future, the trend of using battery-based electric vehicles is predicted to continue to increase, considering that more and more countries are optimizing the use of clean energy by reducing dependence on fuel oil," he said. Meanwhile, Indonesia is known as the world's largest nickel producer by having 23.7 percent of nickel ore reserves from all reserves in the world, so that it is able to produce large nickel ore in a sustainable manner. In addition, Indonesia also has large cobalt reserves which are one of the main ingredients needed to make batteries. Large nickel and cobalt reserves will affect battery production as cobalt and nickel components cover about 90 percent of the total battery components.