The notion of Tesla investing in Indonesia seems more like a utopia than reality. Despite persistent lobbying efforts by the Indonesian government since late 2020, Tesla’s promised investment has yet to become a reality. Instead, the company has turned its attention to Malaysia, where it recently established an office, leaving Indonesia to wonder what went wrong.
The reasons behind Tesla’s reluctance to invest in Indonesia have been a subject of much debate. Rosan Roeslani, Indonesia’s Minister of Investment and Head of the Investment Coordinating Board (BKPM), provided some insights into the matter during a recent meeting with Commission VI of the Indonesian House of Representatives (DPR RI) in Jakarta.
According to Rosan, one of the key factors deterring Tesla from committing to Indonesia is the country’s reliance on fossil fuels, particularly coal, for its energy needs.
“I was directly involved in the discussions with Tesla,” Rosan revealed. “They made it clear that as a company focused on electric vehicles, they are committed to clean energy. However, if they were to set up operations in our industrial zones, where energy is still largely derived from fossil fuels like coal, it would not align with their vision.”
This reliance on fossil fuels places Indonesia at a disadvantage compared to other Southeast Asian countries, such as Vietnam, which have made significant strides in transitioning to clean energy.
Rosan pointed out that in Vietnam, over 62% of the energy used in industrial parks comes from renewable sources such as hydroelectric, solar, and wind power. This commitment to clean energy has made Vietnam a more attractive destination for companies like Tesla, which prioritize sustainability in their operations.
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The Beginning of Tesla Plan to Invest in Indonesia
Indonesia’s efforts to secure Tesla’s investment began in earnest in late 2020, but the road has been fraught with challenges. In 2021, rumors circulated that Tesla had chosen to invest in India instead of Indonesia. These rumors were later contradicted when, in March 2022, Coordinating Minister for Maritime Affairs and Investment Luhut Binsar Pandjaitan announced that Tesla had expressed renewed interest in making a deal with Indonesia.
“Just this morning, I received a call from America; Tesla said they wanted to make a deal with us,” Luhut stated at the time.
However, despite these optimistic statements, Tesla’s investment in Indonesia has remained elusive. Luhut has expressed frustration with what he perceives as a game of “push and pull” being played by Musk and his team. After two years of discussions, the promised investment has yet to materialize, leading to growing impatience and disappointment within the Indonesian government.
“They all want to dictate terms,” Luhut remarked, reflecting his frustration. “I told him, ‘Hey, you can’t do this. Today is different. We must be equals. This country is not a banana republic. This country is a great country.'”
By 2023, it became clear that Tesla had chosen Malaysia over Indonesia as the site for its regional operations. The company opened an office in Malaysia, where it was granted permission to import its vehicles and announced plans to establish showrooms, service centers, and a supercharger network. This decision was a significant setback for Indonesia, which had hoped to become a hub for Tesla’s electric vehicle production in Southeast Asia.
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Despite this disappointment, Luhut remains hopeful that Tesla will eventually invest in Indonesia. However, the immediate future holds a different reality. In 2024, it is not Tesla but Starlink, Elon Musk’s satellite-based internet service provider, that will begin operations in Indonesia. Starlink’s entry into the Indonesian market comes with a relatively modest investment and a small number of employees, a far cry from the large-scale investment Indonesia had hoped for from Tesla.
As Indonesia continues to push for foreign investment in its burgeoning electric vehicle industry, the lessons learned from the Tesla saga may shape its approach to attracting future investors.
The country’s reliance on fossil fuels remains a significant barrier, but with ongoing efforts to transition to cleaner energy, Indonesia still has the potential to become a key player in the global electric vehicle market. Whether Tesla will eventually be part of that future remains to be seen.
