Indonesian Coordinating Minister for Maritime Affairs and Investment Luhut Binsar Pandjaitan will leave for the United States on Tuesday, April 11, to discuss the discrimination in Indonesian nickel products. The U.S. has recently issued regulations on green subsidies for minerals used in the production of electric vehicles. Indonesia is allegedly being excluded from the huge subsidy package.
“So this Tuesday, the Coordinating Minister (Luhut) will be there, and we will negotiate this matter,” said Deputy for Mining and Investment Coordination Septian Hario Seto on Monday, April 10, 2023.
The U.S. government planned to publish tax credit guidance for battery and electric vehicle manufacturers under the Inflation Reduction Act (IRA) in the next few weeks. This policy includes US$370bn in subsidies for clean energy technology.
However, it is feared that batteries containing Indonesian-sourced components will not qualify for the full IRA tax credit as Indonesia does not have a free trade agreement (FTA) with the U.S., to date.
Therefore, the Indonesian government will hold discussions about these obstacles. Moreover, the country is exploring cooperation with a number of multinational companies such as Tesla and Ford to build a nickel supply chain. He assessed that this condition would be detrimental to both parties if it was not resolved immediately.
"Now we are proposing a limited FTA with them,” Septian said.
Previously, the Indonesian Chamber of Commerce and Industry (Kadin) chairperson Arsjad Rasjid urged the U.S. to act fairly in granting green subsidies for minerals used in EV production. “I am concerned for the ostracism from U.S. subsidy packages of Indonesia’s critical minerals used for the green technology,” Arsjad said in a statement on March 4.
Arsjad voiced optimism that Indonesia could play a crucial role in meeting the U.S. needs for EVs and batteries. Indonesia has one-third of the world’s reserves of nickel, a vital material for EV battery production.
