[Asia Report] Prabowo’s Resource Nationalism and the Dilemma for Korean Companies

Indonesia's Resource Control and China's Growing Presence

A Shifting Landscape for Korean Battery and Mobility Ambitions

A few days ago, I returned to Jakarta, and on the surface, nothing seemed seriously wrong. The roads were packed with cars and motorcycles, and shopping malls were brightly lit as usual. However, everyone I met locally agreed that "the economy is not doing well." Perhaps due to recent turmoil caused by fuel price and supply issues, it was common to see long lines of vehicles waiting to refuel at gas stations.

The mood in the financial markets is even more frigid. As foreign capital continues to exit, the rupiah has weakened, and at one point, Indonesian stock prices had plunged by over 40% compared to the start of the year. What stands in stark contrast to this atmosphere is President Prabowo Subianto's confidence. The Prabowo administration has recently taken steps to further strengthen the nation's control over its resources.

"If you don't want to pay the prices we set, you don't have to buy." This is what President Prabowo said in parliament on the 14th. He was referring to Indonesia's strategic resources such as nickel, tin, and gold. Emphasizing that there is no need to rush to sell resources if fair prices cannot be secured, he even declared, "It's better to leave them in the ground for our descendants." This is more than political rhetoric. In fact, the Prabowo government plans to launch a new commodities exchange to trade strategic minerals starting in January 2027. The idea is to establish domestic benchmark prices for nickel, tin, and other resources produced in Indonesia, rather than relying solely on overseas markets.

There is a reason for this. Indonesia is the world's largest producer of nickel. With the rapidly growing era of electric vehicles, the strategic value of nickel has also increased. Nickel is a key material in the NCM (nickel-cobalt-manganese) and NCMA (nickel-cobalt-manganese-aluminum) batteries, where Korean battery companies have a competitive edge. Increasing the nickel content can enhance the battery's energy density, which is advantageous for long-range electric vehicles.

Until now, Indonesia has leveraged nickel as a tool to attract foreign companies. The "hilirisasi" (downstreaming) policy pursued by former President Joko Widodo is a prime example. Instead of simply exporting raw nickel ore, the policy aimed to process and commercialize it domestically to increase added value. As a result, foreign companies began to build refineries and materials factories. Chinese companies were the most proactive, and Korean firms also joined in. The Prabowo administration intends to continue this policy and go a step further by seeking greater influence over price-setting as well.

Hyundai Motor Company charging station at a shopping mall in Jakarta, Indonesia. Photo by Jeong Hojae

The major Korean conglomerates are now facing a critical moment. Hyundai Motor made a significant investment decision in Indonesia back in 2019. Entering a market that was effectively dominated by Japanese automakers, it established the ASEAN (Association of Southeast Asian Nations)'s first Hyundai complete vehicle plant in Bekasi, east of Jakarta. LG Energy Solution followed suit, reaching a so-called "Grand Package" agreement with the Indonesian government in 2020. This large-scale project included LG Energy Solution, LG Chem, LX International, and Indonesian state-owned mining company Antam and Indonesia Battery Corporation (IBC), among others.

In July 2024, HLI Green Power—a joint venture between Hyundai Motor Group and LG Energy Solution—opened a battery cell plant in Karawang, West Java. The annual production capacity is 10 GWh, enough to supply batteries for about 150,000 electric vehicles. At that time, former President Joko Widodo was highly optimistic, emphasizing that Indonesia now had everything: mines and nickel, refineries, precursor and cathode plants, battery production, and automobile factories all located within the country. This was an ideal scenario for Hyundai Motor and LG as well—manufacturing batteries at the world's largest nickel source, producing vehicles next door, and selling them across Indonesia and the ASEAN market. Securing raw materials, production, and sales all within one region.

However, this plan started to falter after President Prabowo took office in October 2024. Ultimately, in April 2025, LG Energy Solution announced its withdrawal from the Grand Package project, which involved investments exceeding 10 trillion won. The joint battery cell plant with Hyundai Motor in Karawang would continue operating, but LG abandoned its grander vision of full vertical integration from nickel mining to refining and materials production.

In hindsight, the situation is not favorable. Korea made early investments in battery cell and vehicle manufacturing plants in Indonesia, but, in essence, was sidelined in the crucial areas of nickel mining, refining, and material supply—the very starting point of its grand plan. In contrast, Chinese companies have secured an even stronger position. In fact, the gap left by LG was filled by China's Huayou Cobalt. Chinese-affiliated firms have already established extensive operations across nickel mining, refining, and battery material businesses. The circumstances for Hyundai Motor are also uncertain. This year, sales by Chinese EV brands such as BYD have been rapidly rising, significantly undermining Hyundai Motor's earlier hopes of dominating the ASEAN EV market.

The environment is markedly different from when Hyundai Motor first entered Indonesia in 2019. Chinese companies are rapidly expanding their presence across the entire value chain—from mining and refining to batteries and complete vehicle production. Moreover, President Prabowo appears determined to fundamentally change the rules of the game through resource control.

Jeong Hojae, Secretary-General of the Asia Vision Forum

This content was produced with the assistance of AI translation services.