The electric vehicle (EV) industry is accelerating in Southeast Asia, and Indonesia is positioning itself as a key player in the global battery supply chain. A significant breakthrough has just been made in this strategic race, as a massive Indonesia China battery project enters a new phase with local company PT Danantara Nasional Indonesia joining the initiative. With an estimated value of Rp96 trillion (around US$5.8 billion), this project not only marks a deepening of Indonesia-China cooperation but also signals Indonesia’s increasing ownership in its energy transition future.

The involvement of Danantara highlights the government's push to localize strategic industries while maintaining foreign investment momentum. This partnership is central to Indonesia’s ambitions to become a global battery hub, supporting both domestic electric vehicle manufacturing and international battery exports.

The Rp96 Trillion Battery Project: Who's Involved?

This large-scale project is spearheaded by a consortium involving Chinese companies known for their prowess in battery materials and EV technology, alongside Indonesian state-linked and private companies. The investment, channeled into Morowali Industrial Park in Central Sulawesi, aims to establish a full-cycle battery production facility — from nickel processing to battery cell production.

Danantara, a local private company founded by seasoned entrepreneurs in the mining and energy sector, has officially signed a partnership agreement to participate in the battery project. Its involvement is seen as a strategic move to ensure local expertise and benefits are not sidelined in the massive foreign-led development.

Other key players include Chinese battery manufacturing giants and Indonesian SOEs such as ANTAM and Indonesia Battery Corporation (IBC), which have long been planning a vertically integrated battery ecosystem.

The goal is clear: build a robust and sustainable domestic supply chain that can support EV growth at home while turning Indonesia into a major exporter of lithium battery components in the region.

Why the Indonesia China Battery Project Matters

The Indonesia China battery project is more than just an economic investment — it is a geopolitical and environmental statement. Here’s why this development is critical on multiple levels:

1. Supporting the Energy Transition

Indonesia, the world’s largest nickel producer, holds a crucial role in the global shift toward cleaner energy. Nickel is a key ingredient in lithium-ion batteries, used widely in electric vehicles. Rather than simply exporting raw nickel, Indonesia now aims to process the material locally into higher-value battery products.

This project enables that ambition by investing directly into downstream processing, reducing reliance on raw material exports and promoting value-added manufacturing. With EVs set to dominate global car markets in the coming decades, Indonesia’s move to capture more of the battery value chain is both timely and strategic.

2. Strengthening Bilateral Ties With China

Indonesia and China have maintained a robust economic relationship over the past decade, particularly in infrastructure and industrial investments. The battery sector is now emerging as the next frontier of this partnership.

This collaboration fits within China’s Belt and Road Initiative (BRI) framework and Indonesia’s Making Indonesia 4.0 roadmap. For China, securing nickel and battery material supply chains is essential for its EV industry. For Indonesia, it’s about tapping into Chinese capital and technological know-how while pushing for greater local participation.

3. Ensuring Local Participation

Danantara’s entry into the project signifies an evolution in how these large-scale partnerships are structured. Unlike earlier extractive deals, this new model puts more emphasis on involving local companies not just as subcontractors, but as full equity partners.

This ensures that more of the economic value generated by the project remains within Indonesia. It also strengthens the domestic industrial base and nurtures local talent in advanced manufacturing and clean technology sectors.

The Future of Indonesia's EV Ecosystem

The inclusion of Danantara in this project is part of a broader pattern in Indonesia’s EV strategy. The government has set ambitious targets, including:

• Producing 600,000 electric cars and 2.5 million electric motorcycles by 2030
• Achieving 30% local content in EV production
• Building a full battery production ecosystem from upstream to downstream

To meet these goals, the government is offering tax incentives, land access, and streamlined permits for EV-related investments. Major global players such as Hyundai, LG Energy Solution, and CATL have already begun projects in Indonesia, attracted by the country's resource advantage and supportive policies.

However, one of the criticisms of earlier deals was the lack of Indonesian ownership and participation. The Indonesia China battery project, with its new chapter involving Danantara, appears to be a response to that criticism.

This signals a shift toward inclusive industrial policy that combines foreign capital with domestic capability, ensuring that the local economy and workforce benefit more directly from the energy transition.

Key Challenges Ahead

Despite the excitement, the project faces several challenges:

• Environmental Risks: Mining and battery production can have a significant environmental footprint, especially if not regulated properly. Concerns about pollution, deforestation, and waste management will need to be addressed through robust environmental governance.
• Technological Capability: While foreign partners bring technology, Indonesia still has a skills gap in battery engineering and automation. Capacity building and workforce development must accompany infrastructure investments.
• Regulatory Clarity: Long-term policy consistency is critical to give confidence to investors and stakeholders. Issues like export bans, royalty policies, and local content requirements must be clearly defined.
• Global Competition: Other countries in Southeast Asia, such as Thailand and Vietnam, are also investing heavily in EV and battery manufacturing. Indonesia must move quickly and strategically to maintain its competitive edge.

Still, if managed correctly, the Indonesia China battery project could become a model for how emerging markets can lead the green industrial revolution while preserving national interests.

Conclusion: A Turning Point for Green Industry in Indonesia

The partnership between Danantara and Chinese investors in this Indonesia China battery project marks a new milestone in Indonesia’s journey toward becoming a leading player in global battery manufacturing. The Rp96 trillion investment not only reflects growing confidence in Indonesia’s industrial potential but also shows how foreign and local stakeholders can collaborate for mutual benefit.

This development is a strong indication that the era of resource extraction without industrialization is coming to an end in Indonesia. Instead, the country is setting its sights on a more sustainable, value-added, and inclusive industrial future — with batteries at the center of that transformation.

As the world moves toward electric mobility and cleaner energy, Indonesia’s nickel wealth and growing industrial ambition could make it a cornerstone of the global energy transition. The success of this project will not only determine the trajectory of Indonesia’s EV industry but also its broader role in the future of sustainable global manufacturing.