Indonesia still keen to court Elon Musk, ‘not worried’ by Tesla’s Malaysia base

Tesla’s new Malaysia hub has been called a ‘snub’ by some critics in Indonesia, where officials have tried since 2020 to entice Musk with nickel and tax incentives

But analysts say nickel is not a draw for Tesla, and that Indonesia’s weak environmental social governance practices are off-putting to green investors

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A man walks in front of Tesla banners in Kuala Lumpur on July 20. Photo: AFP

Published: 7:45pm, 7 Aug 2023Updated: 7:48pm, 7 Aug 2023

As Indonesia continues its years-long effort to court investments from billionaire Elon Musk, observers have said the country’s giant nickel reserves may not be as large a draw as hoped, while its fossil fuel reliance suggests Jakarta is “not entirely serious” about its renewable energy push.

Luhut Pandjaitan, Indonesia’s coordinating minister of maritime affairs and investment, said last month that he planned to speak with the world’s richest man during a visit to California on August 2, in an umpteenth attempt to strike a deal as the country seeks to become a regional electric-vehicle manufacturing hub.

While Jakarta did not confirm if Luhut eventually met Musk, Health Minister Budi Sadikin did score a meeting on August 4 with the entrepreneur to discuss cooperation with his satellite network, Starlink, to provide low-cost internet access to remote health centres in the archipelago. “With internet access, health service consultations can be done online,” Budi said on Sunday.

Tesla Model Y electric vehicles are launched in Kuala Lumpur, Malaysia, on July 20, 2023. Photo: Bloomberg

Jakarta’s dogged charm offensive comes even as it has been left humbled by the businessman’s decision to house Tesla’s Southeast Asian headquarters in neighbouring Malaysia, where it launched operations on July 20 with the release of its Model Y and Model 3 cars, priced from 199,000 ringgit (US$43,600) to 288,000 ringgit.

Many Indonesian publications took a dim view of the development, saying Jakarta had been “snubbed”, while The Jakarta Post said Indonesia’s window to become a major EV manufacturer was closing.

“Jetting across the world to convince would-be investors is a noble effort, but something may be lacking in Indonesia’s offer. We have the biggest economy in Southeast Asia, a growing consumer market, EV purchasing incentives and the world’s largest nickel reserves,” the newspaper said in an editorial on August 3. “Should global players not be scrambling to invest here?”

Officials from Luhut’s ministry have spent the past week reassuring the public that Tesla’s new regional headquarters in Selangor was not a sign that Indonesia was being overlooked by Musk.

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