Indonesian President Prabowo Subianto gives the thumbs up after delivering his annual State of the Nation Address ahead of the country's Independence Day, at the parliament building in Jakarta, Indonesia, Aug. 14. Indonesia celebrates its 81st Independence Day on 17 August.EPA/YONHAP
Ko Young-kyung
The author is a research professor at Yonsei University’s Digital Trade Research Center.
Indonesian President Prabowo Subianto unveiled eight major national priority programs, or PKPN, in an address to the nation on Aug. 14.
Each contains multiple projects, but two stand out: the domestic production of electric vehicles and electric motorcycles and a 100-gigawatt solar power project. They embody Prabowo’s determination to strengthen energy sovereignty and complete the downstream development of Indonesia’s natural resources.
Indonesia’s transition to EVs is underpinned by an industrial strategy aimed at leveraging its position as the world’s largest nickel producer to build a value chain stretching from batteries to finished vehicles. Motorcycles are particularly important. With about 140 million registered, they are an essential means of transportation for ordinary Indonesians. Because the government subsidizes more than 30 percent of gasoline prices, rising oil prices also increase the fiscal burden.
Through the Molinas project, the Prabowo administration aims to create an ecosystem encompassing manufacturing, parts, batteries and charging infrastructure. Electric motorcycles still account for only about 1 percent of motorcycle sales, but the government aims to put 13 million on the road by 2030.
The 100-gigawatt solar project is even bolder. Prabowo said Indonesia would build 30 gigawatts of solar generation capacity this year alone and retire 13 gigawatts of diesel generation. Indonesia is the world’s largest coal exporter but relies on imported oil. Replacing diesel generation on its many islands with solar power is intended to reduce the fiscal strain caused by rising oil prices.
Distributed solar generation, too, could reduce dependence on costly fuel shipments to remote areas, while electrifying motorcycles could curb demand for subsidized gasoline. Together, the projects link energy security directly to household transportation and industrial policy.
That linkage is central to Prabowo’s broader downstreaming agenda. Rather than exporting raw resources and importing higher-value products, Indonesia wants more processing, manufacturing and technological capability to remain at home. Nickel has become the flagship of that approach because it is a crucial material for many electric-vehicle batteries.
The question is whether the government can deliver. A national car project in the 1990s collapsed amid reliance on foreign technology and imported vehicles, the Asian financial crisis and a World Trade Organization dispute. Indonesia has succeeded in expanding domestic smelting by banning exports of unprocessed mineral ores, including nickel, but its dependence on Chinese capital and technology has actually increased. Chinese companies now control about 75 percent of Indonesia’s nickel refining capacity.
The market response has also been mixed. Shares of electric motorcycle maker Selis jumped 15.9 percent on the day of Prabowo’s speech but later surrendered some of those gains. Dian Swastatika Sentosa, which produces solar cells and modules, remained strong through the end of the month. Barito Renewables, a major renewable-energy stock, declined instead. Expectations for the policy may be high, but it remains unclear which companies will ultimately benefit.
Prabowo’s vision is part of a larger effort to increase Indonesia’s economic self-reliance, from natural resources to manufacturing and energy. Yet formidable challenges remain, including dependence on foreign capital, expansion of the power grid and persuading consumers to switch to electric motorcycles.
Prabowo is also under mounting political and economic pressure. His administration has faced a series of problems in pushing ahead with its free meal program, controversy over the military’s expanding role in politics and pressure from inflation and a weakening currency. His approval ratings have also fallen.
The stakes are therefore larger than energy or industrial policy alone. These projects are a wager that ambitious state-led investment can strengthen Indonesia’s industrial base, reduce vulnerability to imported fuel and demonstrate tangible economic gains to voters. But the record of earlier national projects, along with continued dependence on foreign technology and capital, shows how difficult that ambition will be to realize.
Can Prabowo’s projects win over investors and the public at the same time? The test now is no longer the scale of the announcements, but whether his government can turn them into reality.
This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
