ndonesian President Joko Widodo (second from right) attends the groundbreaking of PT Kalimantan Industrial Park in North Kalimantan on Dec 21, 2021. - INDONESIA’S PRESIDENTIAL OFFICE
JAKARTA (The Straits Times/Asia News Network): Indonesia is committed to building an integrated ecosystem for industries that will support the development of the global green economy, said President Joko Widodo.
And North Kalimantan province will become the biggest green industrial park in the world where electricity can be massively sourced from hydro power plants as well as solar panels, he said in his annual state of the union speech to Parliament on Tuesday (Aug 16).
He also proposed a 3,042 trillion rupiah (S$284 billion) spending budget for next year to finance everything from energy subsidies to project development and civil servants' salaries.
He also said work on the planned capital in East Kalimantan will continue, and pledged to end corruption.
Kalimantan, the Indonesian portion of Borneo island, is home to most of Indonesia's largest rivers.
Investors are currently building several cascade hydropower stations on the Kayan river in North Kalimantan.
"I believe that we will become a competitive green product manufacturer in international trade," said Widodo.
"To date, Indonesia has become a key producer of lithium batteries in the global supply chain. Electric vehicle manufacturers from Asia and European countries, as well as the United States have invested in Indonesia."
South-East Asia's largest economy, which has the world's largest nickel reserves, is eager to develop a full supply chain for the resource, from extracting battery chemicals and making batteries to building electric vehicles. Nickel is the most efficient raw material to make electric vehicle batteries.
On Sept 15, a consortium led by South Korea's LG Energy Solution, a subsidiary of LG Chem, broke ground for the construction of a US$1.1 billion (S$1.5 billion) electric vehicle battery plant in Karawang, West Java province, that will have an initial capacity of 10 gigawatt-hours (GWh) and will gradually scale up to 30GWh.
Meanwhile, China's Contemporary Amperex Technology (CATL) has committed to spending about US$5 billion by next year and US$15 billion more until 2028 in Indonesia.
Widodo also went over the nation's programme to improve food production, pointing out that marine biodiversity - such as fish and plants - of the world's largest archipelagic nation will become the biggest source for food and pharmaceutical products.
With regard to rice output, the main staple food, he said Indonesia has been self-sufficient for the past three years and did not rely on imports, thanks to the additional dam and irrigation constructions.
The President also pledged that corruption eradication would remain a top priority, arguing that law enforcers have continued to reveal several cases including graft in national airline Garuda Indonesia, which is now under a debt restructuring process, and a state-owned insurance company Jiwasraya.
Micro, small and medium enterprises (MSMEs) will continuously be supported to allow them to level up, he said, noting that as many as 19 million MSMEs have joined digital ecosystems and have been able to accelerate growth.
The construction of the new capital, called Nusantara, in East Kalimantan province, will have to continue, Widodo also said.
"The new capital is not only for civil servants, but also for innovators and entrepreneurs. The city will not only house government offices, but it will also become a new economic driving force."
"It will not only be an ordinary city, but it will be a forest city with world-class education and health services," he said.
He pledged to continue efforts to support the economy amid global economic uncertainties and heightened geopolitical tensions.
The budget proposal, which represents a 2 per cent decline compared with this year's revised spending plans, assumed growth will rebound to 5.3 per cent next year.
The proposal assumes a budget deficit of 2.85 per cent of gross domestic product, smaller than the 4 per cent expected this year.
