Expert reveals 3 keys to boosting Indonesia's competitiveness in ASEAN's BEV industry

Automotive industry observer and electric vehicle researcher at the Bandung Institute of Technology (ITB), Yannes Martinus Pasaribu, has identified three main steps that can boost Indonesia’s competitiveness in the battery electric vehicle (BEV) industry within the ASEAN region, ranging from regulatory certainty to strengthening the supply chain ecosystem. “To make Indonesia’s BEV climate more competitive compared to other ASEAN countries, policies need to be directed at three main things, the first being providing long-term regulatory certainty and clearer incentives for BEV component manufacturers,” he said when contacted from Jakarta on Tuesday. Yannes explained that clearer incentives for BEV component manufacturers are important because, in his view, current policies still tend to focus on vehicle assembly and consumer incentives, thus not yet optimally encouraging the strengthening of the component industry. The second step, Yannes continued, is accelerating the integrated development of the component supply chain ecosystem. This is considered crucial so that Indonesia does not continue to depend on imports of core components, including batteries, which are the main component of electric vehicles but have not yet been widely produced domestically. “The problem of batteries as the core component of BEVs not yet being produced in Indonesia is the heart of the issue,” said Yannes. Thirdly, he stressed the importance of promoting mass production of affordable BEVs within the country. This would create real demand that can sustain the industry and strengthen the position of local component suppliers. Yannes assessed that these three steps are interrelated and form an important foundation for building a competitive BEV industry. Without market certainty, an integrated supply chain, and incentives that reach component manufacturers, Indonesia will struggle to accelerate the comprehensive development of the electric vehicle industry. In the context of strengthening the electric vehicle industry, Yannes also highlighted that news of plans to implement EV incentives considering nickel-based battery raw materials will strengthen Indonesia’s position in the battery raw material supply chain. However, according to him, this upstream strengthening does not automatically fortify the overall BEV industry ecosystem, which still faces challenges in the component sector. He added that this condition becomes increasingly relevant when compared to countries like Vietnam, which already has a more mature BEV ecosystem and is capable of attracting foreign supplier investment, even exporting products to various global markets. “Vietnam already has a more mature BEV ecosystem and is capable of attracting foreign supplier investment, even exporting them to various global markets,” he said. By strengthening policies in these three main aspects, Indonesia is considered to have the opportunity to catch up and strengthen its position in the electric vehicle industry competition within the ASEAN region.