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Indonesia's Grand EV Plans

As the leading EV manufacturer in Southeast Asia, Indonesia seeks to enhance its economy by becoming the global hub for EV production. In creating a "green industrial park," the country is promoting its mega project for the EV industry by utilizing its abundant supply of nickel (up to one-fourth of the world), which is the crucial ingredient in battery production. The green industrial park is organized to be a key component in the country's grand plan for an end-to-end EV supply chain, starting from extracting and processing nickel and advancing to manufacturing batteries and EVs. However, despite its early gains, Indonesia still needs to work on delivering the project's most significant benefits due to several environmental concerns.


The green industrial park will be set up in the middle of the country's mega-rainforests, which will result in a significant loss of biodiversity and an imbalance of ecosystems in the area. Apart from that, the park's construction will likely generate substantial emissions, not only from deforestation but also from the fuel and materials used. It is estimated that more than 60 million tons of cement will be used in the process. There are also concerns about nickel extraction in the EV supply chain, as many nickel mines within the project operate without permits and invade protected forest areas. This raises curiosity about the environmental impact assessment for the planned industrial park being conducted hastily without the reliable standard. All in all, due to its numerous ecological destruction effects, the grand plan is failing to attract investors that are becoming more concerned about sustainability in their supply chains. For instance, Tesla, the world's leading automaker, obtains nickel from Canada, where environmental regulations are more stringent.


Increased domestic EV production can stimulate Indonesia's GDP growth by boosting economic activity in EV-related industries. It will also assist the country in staying on track with its net-zero emission goals by reducing vehicle emissions; however, Indonesia's grand plan is likely to be the other way around. To further reduce emissions, Indonesia must strengthen its efforts to shift production to renewable sources and pay attention to the process's details, such as the environmental impact assessments, indiscriminate mining, and deforestation of rainforests.

In today's world, where corporations are increasingly developing sustainability goals, many can have a real impact. In contrast, the actions of some firms that claim to care about the environment prove otherwise. "Greenwashing" is conducted by some establishments that only want to respond to markets that are now keen on products perceived as ethical. However, some firms continue to engage in the process for another reason: they are caught off guard by their lack of knowledge of what constitutes sustainability. This is why businesses must conduct in-depth studies on sustainability and apply it to all phases of their operations, not just what consumers perceive.

Indonesia's plan for the EV industry can potentially create a tremendous positive impact on the environment and society. However, when executed improperly, good intentions can result in adverse outcomes. Businesses with sustainability goals ought to create positive effects on the environment. To avoid the mistake, they must turn to every detail in the process, transforming their supply chains at each step toward sustainability.

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