The Indonesian government’s push for an electric vehicle ecosystem creates an ideal opportunity for VinFast, Vietnam’s premier EV manufacturer, to contribute to Indonesia’s goal of reaching sustainable transportation.
Indonesia sits atop a treasure trove of nickel, a key ingredient in lithium-ion batteries, the heart of any EV. This natural advantage gives Indonesia a head-start over many EV-hungry nations. Nevertheless, building a robust EV industry requires not just nickel and factories, but also technology, skills, and investment.
VinFast, among the leading EV manufacturers in Southeast Asia, is well-positioned to contribute to Indonesia’s pursuit of sustainable transportation. The company – a member of Vingroup – was established in 2017, and now owns a state-of-the-art electric automobile and motorbike manufacturing complex with globally leading scalability that boasts up to 90 percent automation in Hai Phong, Vietnam.
Vingroup is the largest private conglomerate in Vietnam focusing on technology and industry, and one of the leading multi-sector private economic groups within the region.
During the three-day state visit to Vietnam focused on fostering economic ties, Indonesian President Joko Widodo toured the sprawling manufacturing complex of VinFast in Hai Phong. “I hope VinFast will invest in Indonesia imminently,” remarked the President during a meeting with Vingroup Chairman and VinFast CEO Pham Nhat Vuong.
Ambitious plan
Indonesia’s EV aspirations are bold, but its natural resources, government commitment, and growing domestic market offer a potent recipe for success.
Indonesia is the largest nickel exporter, accounting for 22 percent of the world’s reserves, according to a report by the ASEAN Briefing. The Southeast Asia country’s bounty extends beyond nickel, encompassing a wealth of copper, cobalt, and bauxite – vital ingredients for the burgeoning EV industry.
Jakarta has courted the likes of VinFast in the hopes of spinning its resource riches into becoming a key global supply chain hub for electric vehicles.
In fact, Indonesia has a very ambitious EV growth plan. By 2025, Indonesia aims to have 2.5 million total EVs on the road, including 400,000 fully electric cars.
By 2030, the country plans to produce 600,000 EVs and have 13 million electric two-wheel vehicles and 2.2 million electric cars on the road. The government also plans to build charging stations in 2,400 locations, up from the 267 EV charging stations in 195 locations as of March 2022.
While still nascent, Indonesia’s domestic EV market is experiencing exciting growth. In 2022, EV sales surged 700%. This demand is primarily driven by two-wheeled electric vehicles, with motorbikes being the preferred mode of transportation for many Indonesians. With the largest population in Southeast Asia and a rapidly expanding middle class, Indonesia presents a significant opportunity for the development of the pure electric vehicle market.
Furthermore, the market is poised for rapid expansion thanks to a clear roadmap and generous government incentives. The government has slashed taxes on imported EV components, rolled out subsidies for buyers, and committed to building a nationwide charging network.
The government recently issued another decree to amend the 2019 regulation to add new incentives for automakers to build EV manufacturing plants in the country.
In the new regulation, car manufacturers that agree to build their manufacturing facilities in Indonesia will be allowed to import completely built-up (CBU) or completely knocked down (CKD) EVs without having to pay import duties or luxury goods value-added tax (VAT) until the end of 2025.
EV dream fueled by VinFast
This pro-EV stance is attracting major players like Hyundai, BYD, and VinFast.
The Vietnamese EV maker has said it will invest at least $1.2 billion in Indonesia and build a manufacturing plant with a projected production capacity of 30,000 – 50,000 vehicles per year. VinFast’s strategic investment in Indonesia is not merely a financial move, it’s well aligned with Indonesia’s burgeoning EV sector.
During the state visit to Vietnam, Indonesian President Widodo enthusiastically endorsed VinFast’s investment plan in Indonesia. The President said that he would create all necessary conditions for VinFast to quickly complete the investment procedures for production and business in the Indonesian market. “For any permit issues, reach out directly to my minister”, he declared, assuring VinFast.
President Widodo further expressed his hope that VinFast’s Indonesian presence would not only bolster the domestic EV ecosystem but also eventually integrate with the burgeoning electric battery industry.
“VinFast is one of the rapidly evolving electric automotive companies”, President Widodo said after touring the VinFast electric vehicle manufacturing complex. “We hope – as I often articulate – this extensive ecosystem will be established soon, and Vingroup Chairman has said that he will commence the construction of the plant in Indonesia at the earliest,” President Widodo emphasized.
During the tour, President Widodo received a firsthand look at the assembly of electric vehicles in the VinFast manufacturing facility. He expressed his pleasure at visiting the facility and was impressed with the quality and class of VinFast’s vehicles.
President Widodo’s enthusiasm signals a clear direction for Indonesia, one where VinFast, with its impressive track record and innovative spirit, could play a key role in paving the way for a greener future.
Electric taxi services can pave the way
Despite the optimism, obstacles lie ahead. Affordable EV options and the nascent charging network remain hurdles to overcome. However, electric taxi services can potentially pave the way for Indonesians to embrace green transportation.
Building on this commitment to green transportation, Green SM, founded by Vingroup Chairman Pham Nhat Vuong, recently announced a $900 million investment plan in Indonesia. GSM offers sustainable rental and taxi services exclusively using VinFast electric cars and scooters and has global expansion in its mind.
According to GSM CEO Nguyen Van Thanh, the $900 million investment will be allocated in several stages and encompasses infrastructure elements such as depots, charging stations, and factories.
GSM and VinFast had earlier signed a Memorandum of Understanding (MOU) with GoTo, Indonesia’s leading technology company, the owner of Gojek transportation services, to help Gojek four-wheel drivers transition to electric vehicles.
With this collaboration, passengers can experience a five-star driving experience from GSM and the best quality electric vehicles from VinFast.
