![The Geopolitics of Technology in Indonesia The Geopolitics of Technology in Indonesia](https://thediplomat.com/wp-content/uploads/2023/05/sizes/td-story-s-1/thediplomat_2023-05-03-053235.jpg)
An electrical automobile charging station in East Jakarta, Indonesia, August 18, 2022.
Credit score: Depositphotos
Once we consider tech in Indonesia, the very first thing that often involves thoughts are homegrown unicorns like GoTo and Traveloka, massive consumer-facing start-ups which can be integral to the nation’s quickly rising digital financial system. And for some time, it appeared like this may turn into a brand new frontier of worldwide competitors, as corporations like Uber tried to enter the market and waves of overseas funding underwrote explosive development. However Uber pulled out, and traders have turned cautious on tech darlings like GoTo. Shopper-facing tech stays necessary to Indonesia’s financial development story, however it isn’t an space of high-stakes geopolitics.
Mastery of cutting-edge industrial applied sciences, however, nonetheless comes with vital geostrategic and financial benefits, and the acquisition and improvement of such applied sciences are each extremely aggressive and intensely political. In Indonesia, there are indicators of sharpening geopolitical competitors in technology-intensive sectors akin to battery manufacturing, clear vitality, and information facilities.
Indonesia is about to be a significant participant within the international clear vitality transition, because it holds the world’s largest provide of nickel ore, an necessary enter within the manufacture of batteries. Batteries will likely be key in a low-carbon future, so Indonesia has leverage right here. It has used a sequence of export bans on unrefined ore to force investment into greater value-added downstream actions like nickel smelting with a watch towards battery and ultimately electrical automobile manufacturing.
Chinese language corporations like Tsingshan have been a number of the first to plow billions into the nickel-rich island of Sulawesi and have constructed massive industrial parks there to course of the ore domestically. Chinese language battery makers like CATL adopted by investing billions in home battery manufacturing services. Indonesian nickel has main strategic worth to China, because it does to any nation battling for supremacy in international electrical automobile and battery provide chains, and it reveals.
Though China could have had the first-mover benefit, a wave of overseas funding has adopted as South Korean and Japanese auto and battery corporations have rushed to meet up with their Chinese language opponents by establishing or increasing industrial manufacturing in Indonesia. Ford even not too long ago introduced it will be a part of a $4.5 billion nickel funding undertaking (with a Chinese language companion). There’s a burgeoning techno-industrial ecosystem anchored by nickel mines and ending within the manufacturing of batteries and electrical automobiles taking form in Indonesia, and international powers are jockeying for place.
Geopolitical competitors coupled with Indonesia’s bebas-aktif technique with its “center manner” orientation advantages Indonesia’s techno-industrial ambitions right here extra so than in consumer-facing tech, as international rivals race to safe entry to scarce provides of nickel. Within the course of, Indonesia stands to profit from massive FDI inflows and doubtlessly the switch and mastery of latest abilities and industrial applied sciences.
Whereas it seems that China gained a first-mover benefit in nickel, the USA has not too long ago emerged as an necessary participant in clear vitality. On the G-20 final November, President Joko Widodo introduced the Just Energy Transition Partnership, a $20 billion dedication from improvement banks, the U.S., Japan, and European allies to spend money on clear vitality. China was not a part of this deal and has not been a significant participant in Indonesia’s renewable vitality sector. Provided that Indonesia is likely one of the world’s largest customers and producers of fossil fuels like coal, and that electrical energy consumption within the nation is predicted to develop strongly within the coming a long time, investing in renewable vitality now has long-term strategic and financial implications.
One other space of the burgeoning competitors is Indonesia’s information infrastructure. China’s Huawei dominates the supply of telecommunications equipment, however the area is extra open for information facilities and cloud computing. Subsequent technology applied sciences like synthetic intelligence want lots of computing energy and require massive investments in back-end infrastructure, and Indonesia has been positioning itself as a regional hub for this bodily {hardware}. Amazon already stated it will invest $5 billion over 15 years in information facilities and cloud computing infrastructure, whereas Huawei pledged $300 million over 5 years. It’s seemingly that aggressive funding on this sector will intensify in coming years.
Those that know Indonesia’s financial historical past know that know-how, financial improvement, and energy are deeply intertwined. One motive the Dutch have been in a position to exploit the land, labor, and sources of Indonesia in the course of the colonial interval was by monopolizing and proscribing entry to superior applied sciences and know-how. Normally, Indonesia nonetheless lacks the flexibility to indigenously push the boundaries of the technological frontier. It stays depending on overseas companions for capital and technology-intensive improvement.
However, there was a push to seize extra of the worth added via superior know-how and maintain it in Indonesia. That is enabled, partially, by the emergence of a multipolar world and growing geopolitical competitors. Nice Energy rivals just like the U.S. and China trying to increase their spheres of affect should compete to safe market entry, funding alternatives and strategic provide chains in international locations like Indonesia. And the best way to try this is to supply Indonesia the issues it actually needs like funding in technology-intensive sectors, and switch of abilities and superior manufacturing capabilities.
It’s too early to inform if or how this may translate into long-term mastery of superior abilities and applied sciences. And there could come a time when Indonesia and different center powers within the area are compelled to select a facet. However that point has not but come, and for now geopolitical rivalry advantages Indonesia by permitting them to extra forcefully ask the query: what’s in it for us?