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Thank you for subscribing to the Southeast Asia Insider, showcasing the best of Asia Times’ latest reporting, commentary and analysis from across Southeast Asia.
This week’s edition includes:
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Will Tesla rev up Indonesia’s
electric vehicle industry?
On the cusp of a major industrial expansion, Indonesia’s government is hoping to clinch big-ticket investments from electric carmaker Tesla and its enigmatic chief executive, billionaire Elon Musk, who recently met President Joko Widodo at his SpaceX complex in Texas following the recent Association of Southeast Asian Nations (ASEAN) summit in Washington.
While isn’t clear if any breakthroughs were reached during the meeting, Asia Times’ veteran correspondent John McBeth reported this week that Jakarta has been pushing Musk to partner with the state-run Indonesia Battery Corporation (IBC) for investments in electric vehicle (EV) and electric-power industries. He shared more on the story in this week’s Q&A.
How close do you reckon Tesla is to making a major investment in Indonesia and what form would it potentially take?
It’s still too early to tell but Investment Minister Bahlil Lahadalia was jumping the gun by suggesting this week that Elon Musk has already made up his mind about building an electric car plant in Central Java’s Batang industrial park.
Sources close to maritime affairs and investment minister Luhut Panjaitan say there is still a “long and winding road” ahead before Musk makes a final decision on investing in Indonesia, given the interest he has also shown in India.
Even then, because Batang relies on a 2,000MW coal-fired power station, the billionaire is much more likely to favor North Kalimantan’s proposed Bulungan green energy project as the site for any Tesla venture because its electricity will come from a 9,000MW hydro plant.
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At the least, Jakarta wants Tesla to help develop an EV battery ecosystem by building what would be the company’s seventh Gigafactory, producing lithium-ion battery packs and other components for its electric vehicles.
What would a Tesla investment mean for Indonesia’s EV ambitions, as well as its drive to add more value to its natural resources?
Attracting companies like Tesla is key to Indonesia’s ambition of becoming the hub of the EV industry in Southeast Asia and perhaps even beyond.
Not only is Indonesia a promising EV market itself as the world’s fourth most populous country, but it has abundant quantities of nickel, copper and other minerals that will underpin EV battery and vehicle production and give it an advantage over competitors without the same natural resources.
Interestingly, Japan’s decades-long domination of the Indonesian car market is now being challenged by South Korea with LG Energy and the Hyundai Motor Group already splashing out $3 billion on new battery and car factories in two locations around Jakarta. The government expects to have 2.2 million electric cars on the road by 2030, or about 20% of the current passenger fleet, and 13 million electric motorcycles.
Founded in March 2021, state-owned holding company IBC has already entered into agreements with the two Korean firms, China’s Contemporary Amperex Technology (CATL) and Foxconn as part of its strategy of cementing a fully integrated EV battery ecosystem.
Two of the country’s biggest coal mining companies, Indika Energy and Adaro Energy, both have plans to move away from coal and expand into the EV industry in partnership with foreign investors.
What would a Tesla investment in Indonesia mean for its massive car-making capacity in China, and would it signal a Tesla move out of China?
Unless the geopolitical situation worsens, any plans Tesla may have for Indonesia are unlikely to have an impact on its business operations in China, certainly in the foreseeable future.
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Tesla's Shanghai Gigafactory, which opened in 2018, is China's first foreign-funded end-to-end vehicle production project.
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Only last November, the company announced a $200 million expansion of its Giga Shanghai, with plans to hire an additional 4,000 new employees. Despite early problems, the plant is now considered Tesla’s primary export hub, but it still can’t keep up with the ever-growing world demand for electric vehicles.
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Indonesia announces lifting of palm oil export ban
President Joko Widodo announced that Indonesia's controversial palm oil export ban will be lifted on May 23 despite the price of bulk cooking oil not yet coming down to the government's target of 14,000 rupiah (US$0.95) per liter. Jakarta sent shockwaves through commodities markets when it enacted an export ban on April 28 in a bid to control high domestic cooking oil prices. Widodo said the decision to lift the ban was taken because the average price of cooking oil had begun to decrease following improvements in the domestic supply situation. The price is currently between 17,200 rupiah and 17,600 rupiah per liter, down from a high of around 19,800 rupiah ($1.35) per liter before the export ban, he said.
Narrower loss for recovering Singapore Airlines
Singapore Airlines (SIA) posted a narrower annual loss of S$962 million ($698.5 million) in its most recent financial year, a sign of a turnaround for the city-state's embattled flag carrier, which reported a S$4.3 billion ($3.1 billion) loss a year earlier due to Covid-19 travel restrictions. SIA said it carried 3.9 million passengers in its most recent fiscal year, up sixfold from a year earlier as Singapore took steps to gradually shed pandemic era travel restrictions. Annual revenue doubled to S$7.6 billion ($5.5 billion). The airline, one of the Southeast Asian financial hub's most high-profile companies, said this week it was ready to ramp up operations further amid returning demand for international air travel as borders reopen in almost all key markets.
Thailand agrees to talks on Washington’s economic framework
US President Joe Biden is due to formally launch his administration’s long-awaited Indo-Pacific Economic Framework (IPEF) during his trip to Japan and South Korea from May 20-24 in a move aimed at boosting the US’ economic presence in the region to counter China's rising clout. The IPEF will focus on standards for the digital economy, supply chain resiliency, decarbonization, infrastructure and labor standards, but unlike a free trade agreement would not expand market access. Thailand is the latest country to express interest in joining the talks, though the kingdom said earlier this week its decision to engage is not a commitment to join the final arrangement. Within Southeast Asia, Singapore and the Philippines have also expressed interest in the IPEF.
Marcos doubles down on boosting ties with China
Philippine President-elect Ferdinand "Bongbong" Marcos Jr said this week that diplomatic ties with China are "set to shift to a higher gear" under an "independent foreign policy" that he said garnered support from Chinese President Xi Jinping during a congratulatory phone call following his landslide electoral victory on May 9. "I told him, the way forward is to expand our relationship, not only diplomatic, not only trade, but also in culture, even in education, even in knowledge, even in health to address whatever minor disagreements that we have right now," said Marcos in a statement, which omitted mention of territorial disputes in the South China sea that in recent years have strained bilateral ties and undermined outgoing incumbent Rodrigo Duterte’s pro-Beijing stance.
Malaysians have ‘somewhat favorable’ view of Ismail
A survey commissioned by the US-based International Republican Institute (IRI) found that most Malaysians have at least a “somewhat favorable opinion” of Prime Minister Ismail Sabri Yaakob’s nine-month-old government. According to the results, only 17% of respondents "approve a lot" of the current administration, while another 45% "somewhat approve." Another 22% "somewhat disapprove," while 13% “disapprove a lot” and three percent were “unsure.” Ismail came to power in August last year after a faction of lawmakers from the ruling United Malays National Organization (UMNO) withdrew support from then primer Muhyiddin Yassin. The same survey found 50% of respondents want to see new political parties, while 44% were satisfied with current choices.
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Biden shrugs off ASEAN’s free trade mantra
Nile Bowie | May 20, 2022
Biden told Southeast Asian leaders that strengthening US ties with ASEAN is “at the very heart” of his foreign policy strategy. But absent an economic alternative to Beijing’s various big-ticket initiatives, the administration’s Indo-Pacific Strategy risks being viewed through the prism of security and what some regard as an effort to geopolitically contain China.
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Indonesia’s cattle under threat from two diseases
John McBeth | May 19, 2022
Indonesia’s dairy and cattle industries are in danger from a resurgence of deadly foot-and-mouth disease (FMD) and an outbreak of another viral scourge known as Lumpy Skin Disease (LSD), both of which require a mass vaccination program if they are to be brought under control. Both diseases can have a devastating impact on livestock production and international trade.
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Give Biden credit for trying something new in Indo-Pacific
Steve R Okun | May 19, 2022
As President Joe Biden arrives in Asia for his first presidential visit, we applaud his personal commitment to the region. Following the first-ever meeting of ASEAN leaders held in Washington, DC, a strong and needed message has been sent of the importance of the Asia-Pacific region to US national interest, even in times of global crisis elsewhere.
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‘Godfather’ of Myanmar’s crony capitalists dies
Dominic Oo | May 18, 2022
Myanmar’s foremost beverage and media tycoon Thein Tun, who was once seen as a “godfather” in the old world of crony business, has died aged 85. Thein Tun and his family owned and published the now-suspended Myanmar Times newspapers and were the local partner of Danish brewer Carlsberg. His family also runs the Tun Commercial Bank.
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ASEAN-US Summit: rhetoric versus reality
Mark Valencia | May 17, 2022
US President Joe Biden declared last week that strengthening the US relationship with ASEAN is “at the very heart of [US] foreign-policy strategy.” Perhaps that is so. But the goal of that strategy is to constrain and contain China, and that is not necessarily in the interests of ASEAN or its members. Last week’s summit was still all about efforts to form a united front against it.
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Biden tries to strengthen US alliance with ASEAN
Richard Javad Heydarian | May 16, 2022
In his latest display of “reassurance diplomacy,” United States President Joe Biden hosted his Association of Southeast Asian Nations (ASEAN) counterparts in the White House for a two-day event in Washington last week. The two sides vowed to pursue a “Comprehensive Strategic Partnership” based on “meaningful, substantive and mutually beneficial” agreements.
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Indonesia romances the world’s richest man
John McBeth | May 16, 2022
The world’s richest man, youthful South African-born entrepreneur and private spaceflight pioneer Elon Musk, has become an irresistible target of the Indonesian government in its efforts to attract heavyweight investors to a country on the cusp of a major industrial expansion. President Joko Widodo was quoted as calling Musk a “super-genius.”
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The Candidate's Dilemma: Anticorruptionism and Money Politics in Indonesian Election Campaigns
By Elisabeth Kramer
Cornell University Press, May 2022
In The Candidate's Dilemma, author Elisabeth Kramer tells the story of how three political candidates in Indonesia made decisions to resist, engage in, or otherwise incorporate money politics into their electioneering strategies over the course of their campaigns.
As they campaign, candidates encounter pressure from the institutional rules that guide elections, political parties, and voters, and must also negotiate complex social relationships to remain competitive. For anti-corruption candidates, this context presents additional challenges for building and maintaining their identities. Some of these candidates establish their campaign parameters early and are able to stay their course.
For others, the campaign trail results in an avalanche of compromises, each one eating away at their sense of what constitutes "moral" and "acceptable" behavior. The Candidate's Dilemma delves into the lived experiences of candidates to offer a nuanced study of how the political and personal intersect when it comes to money politics, anti-corruption, and electoral campaigning in Indonesia.
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