NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

By Justin Jin Soong Liew and Chun Sheng Goh

Since proclaiming independence in 1945, Indonesia’s leaders have not been shy about their ambitions to transform the county into an economic powerhouse. For decades, economic plans relied heavily on extracting resources like timber, coal and gas. Now, though, President Joko Widodo is embracing a plan to ride the wave of the global climate agenda with projects like a “green industrial park.” The strategy plays off Indonesia’s comparative advantages, especially natural resources like nickel, land and water.

In a recent round of visits to Asia Pacific’s three economic heavyweights — China, Japan and South Korea — Widodo consistently highlighted Indonesia’s request for investment and technological support in developing its new “green” capital city as well as the aforementioned industrial park. These two mega projects, both sitting on the east coast of Kalimantan, the Indonesian portion of the island of Borneo, are now Indonesia’s flagships in its drive to become an advanced economy.

The industrial park, spanning 30,000 hectares (74,000 acres) and to be powered mainly by hydroelectricity, will be a key component in the country’s grand plan for an end-to-end electric vehicle (EV) supply chain, starting with extracting and processing nickel ore and advancing to manufacturing batteries and, eventually, EVs. Home to almost a quarter of the world’s nickel reserves, Indonesia has been actively wooing EV pioneers like Tesla to make the country a global EV production hub.

Photo courtesy World Bank.