Rising Economic Might of Indonesia
Indonesia is on the verge of a significant economic transformation, according to our website's Global Head of Emerging Markets and Asia Pacific Research. The country is poised to become a regional powerhouse and a potential global player in the electric vehicle (EV) battery market.
This transition is driven by several key factors.
Abundant Natural Resources and Downstream Processing
Indonesia's rich mineral wealth, including nickel, crucial for EV battery production, gives it a competitive edge. The government's emphasis on downstream processing allows for the addition of high value domestically, accelerating industrialization and competitiveness.
Science, Technology, and Human Capital Development
The Indonesian government prioritizes strengthening technological capacity and developing national talent. This strategic focus on science and technology underpins innovations required for advanced industries like EV battery manufacturing and high-tech sectors.
Strong Economic Growth and Investment Climate
Indonesia's economy is thriving. In Q2 2025, its GDP grew by 5.12% year-on-year, surpassing expectations, with household consumption and fixed capital formation (investment) as key drivers. This robust economic momentum provides a solid foundation for industrial expansion, including in the EV and battery sectors.
Regional Supply Chain Integration and Geopolitical Position
Southeast Asia's growing role as a hub in semiconductor and EV supply chains benefits Indonesia's mineral strengths. Regional collaboration leverages Indonesia's resources with other countries’ manufacturing expertise, positioning the country strategically in global EV battery supply chains.
Policy Support and Industrial Projects in EV Sector
Indonesia is not lagging behind its neighbours in supporting EV battery production and market growth. Its efforts in policy and industrial capacity are part of a broader regional momentum pushing Southeast Asia as a key player in EV technologies.
Long-term Economic Vision
Indonesia aims to become the 4th largest economy by 2045 with sustained 5–6% growth, leveraging demographic dividends and economic diversification including renewable energy and high-tech industries, which support its ambitions in EV production and related advanced manufacturing.
In addition to these factors, Indonesia's strategic location and rich natural resources have contributed to its rise. The country is the world's largest producer of nickel, second largest producer of tin, and fourth largest producer of bauxite. Its large population and rising wages have led to a buoyant consumer market. Unlike many regional economies, Indonesia is still experiencing demographic dividends.
Indonesia's impressive resilience and growth amid global challenges such as trade wars and pandemics further underscore its potential as a regional powerhouse. Its economic rise and potential as a global EV battery supplier are anchored in its rich mineral resources combined with government policies promoting technological advancement, industrial downstream processing, investment growth, and integration into Southeast Asia’s evolving high-tech manufacturing ecosystem. These factors collectively strengthen Indonesia’s position as an emerging regional economic powerhouse with growing influence in the global EV battery market.
- The government's emphasis on downstream processing in Indonesia, coupled with the country's abundance of nickel, a key resource for EV battery production, positions the business sector to capitalize on this natural advantage, particularly in the electric vehicle (EV) battery market.
- The Indonesian government's strategic focus on science, technology, and developing national talent, as well as its strong economic growth and investment climate, create a robust foundation for the finance industry, paving the way for industrial expansion, including in the EV and battery sectors.
