LG Maintains Major Investment Commitment to Indonesia's EV Battery Ecosystem Despite Partial Withdrawal
NERACA Jakarta – Investment and Downstreaming Minister/Head of the Investment Coordinating Board (BKPM) Rosan Roeslani stated that LG, previously reported to have cancelled its investment in the electric vehicle (EV) ecosystem project, has not entirely withdrawn from the project's development.
He explained that the project comprises four joint ventures with different development focuses, and confirmed that LG remains involved in one of the joint ventures in the project known as Grand Package.
"What I want to convey is that LG's commitment remains substantial," he said in Jakarta on Tuesday (29/4).
Rosan stated that in the initial investment phase, LG had already realised capital investment of US$1.1 billion or Rp18.4 trillion (at an exchange rate of Rp16,764), and plans to add US$1.7 billion or Rp28.5 trillion in the second phase of battery cell development under the Grand Package project.
"So the total investment could reach, once completed, US$2.8 billion (Rp46.9 trillion) for joint venture number four, which is in line with the initial target for this joint venture," he added.
Furthermore, Rosan said he would visit the battery factory already built by LG in Karawang, West Java the following day, which was the result of the initial phase investment.
"Tomorrow I will also visit the battery factory, because there have been preliminary discussions with our side, and in fact they want to increase their investment," he said.
Rosan explained that LG Energy Solution did not withdraw from part of its investment in the battery ecosystem project of its own accord — rather, it was the Indonesian Government that asked LG to step back because negotiations had dragged on for too long.
Rosan said negotiations with LG had been running for five years since 2020. "It was said that they (LG) made the decision to withdraw, but more accurately it was us who made that decision. This was based on a letter dated 31 January 2025 issued by the Ministry of Energy and Mineral Resources of the Republic of Indonesia. Why was that letter issued? Because the negotiations had gone on for far too long, whereas we wanted everything to proceed well and quickly, given that negotiations had already been running for five years," Rosan said at a press conference at the Presidential Office, Presidential Palace, Jakarta, on Wednesday (23/4) evening.
Rosan continued that the letter was subsequently issued to LG because Chinese investor Huayou had expressed its desire to invest in the battery ecosystem sector. Huayou's interest in joining the battery project consortium in Indonesia had been made known since 2024.
Indonesian Employers' Association (Apindo) Chairwoman Shinta Kamdani said LG's withdrawal from the project should not be interpreted hastily, particularly in relation to Indonesia's EV battery industry ecosystem. According to her, other investors are already prepared to step in to replace LG in the project consortium.
"So, although LG has other plans, many other investors are ready to come in, including from Korea, looking at many sectors," said Shinta.
Shinta said LG's withdrawal must be examined carefully. In her view, linking it to Indonesia's battery industry ecosystem would not be appropriate. Moreover, the decision to withdraw was not solely from LG's side — the Indonesian Government had asked the company to step back due to protracted negotiations.
Additionally, the reciprocal tariffs imposed by US President Donald Trump have led LG to pursue alternative plans. "Their demand for EVs is also different, and they also need to consider investment in the United States. Because with the IRA, the Inflation Reduction Act, that has a significant impact. But we need not worry," she said.
He explained that the project comprises four joint ventures with different development focuses, and confirmed that LG remains involved in one of the joint ventures in the project known as Grand Package.
"What I want to convey is that LG's commitment remains substantial," he said in Jakarta on Tuesday (29/4).
Rosan stated that in the initial investment phase, LG had already realised capital investment of US$1.1 billion or Rp18.4 trillion (at an exchange rate of Rp16,764), and plans to add US$1.7 billion or Rp28.5 trillion in the second phase of battery cell development under the Grand Package project.
"So the total investment could reach, once completed, US$2.8 billion (Rp46.9 trillion) for joint venture number four, which is in line with the initial target for this joint venture," he added.
Furthermore, Rosan said he would visit the battery factory already built by LG in Karawang, West Java the following day, which was the result of the initial phase investment.
"Tomorrow I will also visit the battery factory, because there have been preliminary discussions with our side, and in fact they want to increase their investment," he said.
Rosan explained that LG Energy Solution did not withdraw from part of its investment in the battery ecosystem project of its own accord — rather, it was the Indonesian Government that asked LG to step back because negotiations had dragged on for too long.
Rosan said negotiations with LG had been running for five years since 2020. "It was said that they (LG) made the decision to withdraw, but more accurately it was us who made that decision. This was based on a letter dated 31 January 2025 issued by the Ministry of Energy and Mineral Resources of the Republic of Indonesia. Why was that letter issued? Because the negotiations had gone on for far too long, whereas we wanted everything to proceed well and quickly, given that negotiations had already been running for five years," Rosan said at a press conference at the Presidential Office, Presidential Palace, Jakarta, on Wednesday (23/4) evening.
Rosan continued that the letter was subsequently issued to LG because Chinese investor Huayou had expressed its desire to invest in the battery ecosystem sector. Huayou's interest in joining the battery project consortium in Indonesia had been made known since 2024.
Indonesian Employers' Association (Apindo) Chairwoman Shinta Kamdani said LG's withdrawal from the project should not be interpreted hastily, particularly in relation to Indonesia's EV battery industry ecosystem. According to her, other investors are already prepared to step in to replace LG in the project consortium.
"So, although LG has other plans, many other investors are ready to come in, including from Korea, looking at many sectors," said Shinta.
Shinta said LG's withdrawal must be examined carefully. In her view, linking it to Indonesia's battery industry ecosystem would not be appropriate. Moreover, the decision to withdraw was not solely from LG's side — the Indonesian Government had asked the company to step back due to protracted negotiations.
Additionally, the reciprocal tariffs imposed by US President Donald Trump have led LG to pursue alternative plans. "Their demand for EVs is also different, and they also need to consider investment in the United States. Because with the IRA, the Inflation Reduction Act, that has a significant impact. But we need not worry," she said.