Indonesia’s INA to pursue key EV themes with $2B fund

The drive to develop an electric vehicle ecosystem in Indonesia will require advancing battery technology, a spokesperson for the sovereign wealth fund said.
Indonesia’s INA to pursue key EV themes with $2B fund

Sovereign wealth fund Indonesia Investment Authority (INA) is likely to focus on battery development and nickel mining in its initial phase, as it seeks to develop a sustainable ecosystem for electric vehicles (EV) in the country.

The SWF plans to set up a green or EV fund of at least $2 billion with China’s battery maker CATL and Hong Kong-based financial services firm CMB International, CEO Ridha Wirakusumah announced in November.

“Indonesia is blessed and fortunate with an abundance of nickel reserves, but at the end of the day it is only a small part of the EV ecosystem,” Masyita Crystallin, a spokesperson for INA, told AsianInvestor. “Our aim is the development of a sustainable end-to-end ecosystem for EVs.”


The green fund initiative is part of a broader government strategy to prepare Indonesia to become a major player in the EV market. EVs refer to vehicles that are partially or fully powered by an electric battery.

INA will look at opportunities in areas such as battery development, especially given CATL’s competitive edge as the largest battery manufacturer in the world, the fund’s spokesperson said.

The battery is one of the most valuable components of the EV, representing an estimated 40% of the EV’s value, Crystallin noted. “Bear in mind that battery making requires a specific, unique set of skills including cell-level chemistry, hence we hope through this collaboration with CATL, we can bring in the required knowledge and expertise,” the spokesperson said.

“Battery technology has been the primary factor barring larger scale adoption of EVs in the past. We believe the advancement of battery technology is a key differentiator for the EV chain,” Crystallin said.

The government has also been pushing for overseas companies to set up shop in the country to promote EV technology development.

Japan’s Toyota pledged $1.8 billion to produce EV vehicles in Indonesia, while Taiwan’s Foxconn group also plans to establish a joint venture for battery and EV manufacturing, local media reports said. German automaker Volkswagen is also likely to invest in the EV battery ecosystem.

It will be crucial for Indonesia to ensure that these pledges turn into actual investments in factories, said Nicholas Mapa, senior economist for Philippines at ING.

Nicholas A. Mapa

Increased domestic production of EVs could bolster Indonesia’s GDP growth, contributing to manufacturing activity, exports, and domestic vehicle sales, said Mapa.

INA declined to comment on what the seed funding of the green fund would be or how long it would take to reach the desired $2 billion, saying it would depend on investment opportunity and feasibility.

“I think despite the near-term constraints, Indonesia recognizes the role EV and its related industries will play in transportation in the medium term. With most nations pledging to adopt EVs by specific targets — the Philippines recently announced a shift to EVs by 2040 — Indonesia can establish itself early on as a market leader in EV production and development,” Mapa said.


The reason for the focus on EVs is obvious: ample domestic availability of raw materials such as nickel, to produce the most important component of the vehicles, the battery pack.

In the initial phase, nickel mining is likely to be among the key beneficiaries of the emphasis on EV development in the country, according to experts.

“We can expect the initial impact of the shift to EV to be relatively muted during the period of transition to EV acceptance and usage, with benefits delivered mainly by the increase in mining activity,” said ING’s Mapa.

Indonesia is home to the world’s largest reserves of nickel, followed by Australia. Indonesia is also the largest producer of nickel, accounting for 37% of global output, and will likely remain so in the medium term, said Trinh Nguyen of Natixis CIB.

Trinh Nguyen
Natixis CIB


“Moreover, the government is putting policies in place to facilitate onshore investment in nickel processing,” said Nguyen.

Overall, the sovereign wealth fund seems determined to pick up the pace of transition to green energy and transportation.

INA signed an investment framework agreement on December 6 with the Investment Fund for Developing Countries of the Kingdom of Denmark, to explore investment opportunities to advance the transition to green energy and inclusive social development in Indonesia.

The target value of the joint investments is expected to reach up to $500 million.

IFU and INA hope to provide capital to green and sustainable projects in the range of $100 million each. Both parties will also seek potential co-investors to contribute the rest of the funds.

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