AmCham Update
AmCham Update Vol. 4 #97
EV Local Content Target, Carbon Capture investment Opportunities, China Exim Bank to Support Strategic Projects, Gov't Proposes SOE Capital Injections
Sep 13, 2023


Gov't Sets EV Local Content Target

The Ministry of Industry has targeted local content requirements (TKDN) for electric vehicle (EV) production in Indonesia to reach at least 80 percent by 2030. The target is in line with the EV development roadmap regulated in Minister of Industry Regulation (Permenperin) 6/2022, which also covers the development roadmap of vital components such as batteries, electric motors, and converters, Minister of Industry Agus Gumiwang Kartasasmita said.

He added that the government remains optimistic on the local content target and progressive policies such as fiscal stimuli and incentives that will encourage EV adoption.

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Indonesia’s Carbon Capture Sector Potential Offers Investment Opportunities

The government is preparing a presidential regulation on carbon capture and storage (CCS) that would allow foreign countries to store carbon in Indonesia through a cross-border carbon liabilities scheme. CCS involves injecting and storing carbon dioxide (CO2) deep underground to prevent it from entering the atmosphere.

The planned Presidential Decree will serve as the regulatory foundation for future government-to-government (G2G) carbon storage transactions. Afterward, intergovernmental agreements will serve as the basis for carbon storage agreements between businesses. However, even though the regulation allows for other countries to store carbon here, Indonesia will prioritize storing its own carbon first, said Director General of Oil and Gas Tutuka Ariadji.

Current data shows global investment in CCS has reached $6.4 billion, with Asia contributing $1.2 billion. Indonesia should be ready to play a major part in this technology investment, said Coordinating Minister for Maritime Affairs and Investment Luhut Binsar Pandjaitan. Indonesia is estimated to have a carbon storage capacity of 400 gigatons, Luhut said.

The government has 15 CCS and/or carbon capture, utilization, and storage (CCUS) projects spread across the archipelago, many of which are still in the study stage. However, they are estimated to begin coming on stream by 2030 with potential injections of around 25 to 68 million tons of carbon in 2030-2035.

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AmCham Cares: Habitat for Humanity Indonesia

Habitat for Humanity Indonesia organized the Indonesia Housing Forum 2023 on Aug 30, to commemorate National Housing Day (Aug 25). The Forum, seeking a continuous and affordable solution to decent housing, was a hybrid seminar, with the in-person event held at the medical school hall of Universitas Indonesia (UI).

The event, under the “Building inclusive, continuous, and affordable housing for all,” came as a result of a collaboration involving stakeholders including government representatives such as Dana Kusumastuti, Director General of the Ministry of Public Works and Public Housing; academic institutions such as UI's Civil Engineering Department; organizations such as Real Estate Indonesia; and the private housing sector.

Dana served as the keynote speaker and shared emphasized the significance of collaborative efforts from stakeholders to improve access to decent housing.

“Through this event, we have gained the awareness necessary to implement the right solutions for housing-related challenges and promote decent housing ownership," Dana said.

Habitat for Humanity Indonesia National Director Susanto said he hoped there would be innovative ideas developed to solve housing issues in Indonesia through the event.

“Our hope [is], at least we can lessen the housing issues in Indonesia by 30 percent through [the] Indonesia Housing Forum and the development of decent housing can improve significantly,” he said.

China Exim Bank to Support Strategic Projects

The Indonesia Investment Authority (INA) and the Export-Import Bank of China (China Exim Bank) have signed a framework agreement to strengthen their economic cooperation in the infrastructure, renewable energy and telecommunications sectors. Both parties also expressed interest in exploring the investment potential for Indonesian strategic projects.

The agreement covers investment in various asset classes, such as common and preferred equity, and convertible debt instruments. It also includes mutual information sharing on economic trends, financial insights and market overviews.

The cooperation shows both countries' strong commitment to ensure sustainable growth in the midst of the dynamic global landscape, Chairman of the INA Board of Directors Ridha Wirakusumah said.

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Gov't Proposes SOE Capital Injections

A proposal to provide state capital injections (PMN) to several state-owned enterprises (SOE) has been presented to the House of Representatives Commission XI, Minister of Finance Sri Mulyani Indrawati said.

The recipient SOEs for cash injections in the 2023 State Budget (APBN) include construction company Hutama Karya (Rp 28.84 trillion), state electricity company PLN (Rp 10 trillion), finance firm Sarana Multigriya Finansial (Rp 1.53 trillion), electronic manufacturer Len Industri, or Persero, (Rp 1.75 trillion), and aviation services company Perum LPPNPI/Airnav Indonesia (Rp 659.19 billion). Sri Mulyani also said cash injections drawn from the Investment Financing Reserve will be disbursed to financial service firm Bahana Pembinaan Usaha Indonesia, aviation company Aviasi Pariwisata Indonesia, and construction company Bina Karya, totaling Rp 4.514 trillion.

Non-cash injections through the conversion of receivables from the 2023 APBN will be given to Rajawali Nusantara Indonesia (Rp 2.56 trillion) and Len Industri (Rp 456.25 billion). Non-cash injections in the form of state-owned assets will be given to Brantas Abipraya, ASDP Indonesia Ferry, Perum LPPNPI/Airnav Indonesia, Sejahtera Eka Graha, and Pertamina.

The 2024 APBN bill, which has been submitted by President Joko Widodo, lists Hutama Karya (Rp 18.6 trillion), Wijaya Karya (Rp 6 trillion), and Bahana Pembinaan Usaha Indonesia (Rp 3.556 trillion) as recipients. Hutama Karya and Wijaya Karya top the finance ministry’s agenda as both SOEs are engaged in national strategic projects (PSN).

In recent years, analysts have warned that numerous state-owned companies may be in financial trouble.

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Jokowi Tries Out Jakarta-Bandung High Speed Train

President Joko Widodo joined the Jakarta-Bandung High Speed Train (KCJB) trial run earlier today, Sept 13, along with Coordinating Minister of Maritime Affairs and Investment Luhut Binsar Pandjaitan, Minister of Transportation Budi Karya Sumadi, Minister of State-Owned Enterprises (SOEs) Erick Thohir, Cabinet Secretary Pramono Anung, and a number of other ministers and celebrities.

The Ministry of Transportation has confirmed the high speed train will start operations on Oct 1. Currently, trials are being carried out to ensure the safety of its facilities and infrastructure.

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AmCham Update is AmCham's regular newsletter on developments related to the pandemic crisis and other issues in Indonesia. It is edited by AmCham Managing Director A Lin Neumann and written by the AmCham Staff. Paul L Goddard.

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