[Herald Interview]Korea’s tech, Indonesia’s resources can propel EVs: ASEAN biz chief

Korea's manufacturing capabilities and Indonesia's natural resources can pave the way for a competitive supply chain for electric vehicles, ASEAN Business Advisory Council Chair Arsjad Rasjid, said in an interview with The Korea Herald on Thursday.

"Korean companies will be able to help (ASEAN) for capacity building in EV ecosystems. Korea can give us policy suggestions, and ASEAN BAC can discuss (these) with ASEAN leaders," said Rasjid.

Rasjid was in Seoul last week to attract investment in ASEAN and boost economic diplomacy between ASEAN and South Korea through a trade roadshow, urging Korean companies to invest in production facilities in the region.

ASEAN BAC, established at the 7th ASEAN summit in November 2001, is dedicated to ASEAN's global economic integration by fostering innovation and inclusivity.

Korean companies should take the lead in developing the region's EV ecosystem and start collaborating in the mining sector to activate supply chains, he said, urging Korean companies to tap into Indonesia's potential by taking advantage of tax incentives, subsidies and rebates for EV production.

Indonesia holds some 21 million metric tons of nickel, accounting for roughly 22 percent of global reserves.

In a push to accelerate economic transformation, create more jobs and shift from fossil energy to electric energy, the Indonesian government is offering a value-added tax (PPN) incentive for purchasing electric cars and buses to attract more investments in the EV ecosystem.

The government also minimized the value-added tax on electric cars with at least 40 percent domestic parts, from 11 percent to 1 percent on electric cars manufactured.

Rasjid suggested using Korean technology for transitioning from traditional mining and processing to a zero-waste approach, utilizing Indonesia's nickel, coal, palm oil, natural gas and bauxite reserves.

“Processing critical minerals (such as bauxite) needs clean technology with sustainability and zero-waste thinking. Korea has it,” he said while proposing to integrate the supply chain for EV components through localization and public-private partnerships.

“This is the model we need, the model of co-bridging (cooperation) together."

When asked about concerns over Korean companies losing market share to their Chinese counterparts in the ASEAN EV market, Rashjid advised Korean companies to expand investments in charging infrastructure to promote widespread EV adoption and build fast-charging stations along major highways and urban areas.

Referring to Hyundai Motor Group's recent $60 million investment in an EV plant in Indonesia as an example, he applauded the South Korean carmaker's commitment to not only selling but also building and investing in capacity. Hyundai Motor Group is building a production line with a combined investment of $60 million in Bekasi, a city located on the eastern border of Jakarta, Indonesia.

Investments in regional connectivity would also facilitate easier EV ownership and contribute to addressing climate change, air pollution and energy security problems, according to Rasjid. who urged Korea to share technology.

New collaborations are underway in the battery recycling industry, he said, without elaborating on which Korean company is involved, citing confidentiality.

He also pointed to the substantial consumer market that ASEAN represents, positioning the region as the "supply chain of the world."

Rasjid hopes that ASEAN could become the next major EV supply chain hub, considering the region's economic growth, job creation and environmental benefits, as well as the region's abundant hold of rare minerals and its geographical proximity to major economies like South Korea, China, India, Japan and Australia.

But the region needs infrastructural investment to advance transportation networks, logistic hubs, digital connectivity and energy facilities.

Commenting on South Korean steelmaker Posco's commitment to invest $6.7 billion in Indonesia's capital city relocation project to Nusantara, he called for more support from Korean companies with advanced engineering and construction capabilities.

Rasjid suggested that Korean engineering, procurement and construction companies should focus on Nusantara, which will become a central hub connecting Brunei, Indonesia and Malaysia. Indonesia aims to develop its future capital as a green and smart city with enhanced urban connectivity, health infrastructure and education.

Rasjid also underlined the rapid growth of the digital economy in Southeast Asia, with the region's gross merchandise value reaching $200 billion in 2022.

The annual growth of the region's digital economy is projected to continue at a rate of 20 percent until 2025, said Rasjid.

By leveraging Korea's advanced digital technology and ASEAN's expansive digital market, Rasjid stressed the immense potential of e-commerce, fintech, digital services and cybersecurity to drive innovation and growth.

ASEAN diversity and Korea's technological advancements and expertise create a strong basis for a mutually beneficial partnership, Rasjid said, noting the role of digital transformation in spurring economic growth and enhancing the quality of life.

Indonesia's growing digital market and digital economy as a complement to South Korea's technological capabilities, Rasjid added, citing the use of digital payments through the Quick Response Code Indonesian Standard (QRIS) as an example of seamless QR code-based payments for Indonesian consumers.

To resolve the skills gap in ASEAN and evolving industries’ workforce, Rasjid said joint training programs with Korean educational institutions are also needed to develop sector-specific technical skills.

According to Rasjid, student exchange programs, internships and research collaborations to enhance cross-cultural understanding shall now be initiated to facilitate Indonesia-Korea knowledge transfer.

Streamlining visa processes for ASEAN talents will be a form of "win-win diplomacy," as it would expand ASEAN-Korea labor mobility.

Promoting fair labor practices and protecting the rights of migrant workers will not only address the workforce challenges faced by Korea but also empower ASEAN's young population and contribute to sustainable economic growth and mutual prosperity, Rasjid added.