Indonesia has made an important step toward becoming a base for the production of electric vehicles (EVs). In 2020 Hyundai Motor started the construction of its automotive plant in Karawang, Indonesia, approximately 50 km east of Jakarta. Then in mid-September 2021, LG Chem jointly with Hyundai Motor started the groundbreaking of its EV battery plant near the Hyundai automotive plant.
The Hyundai automotive plant in Indonesia started with the plant's producing 70 thousand units of autos per year with ICE (internal combustion engines). The second step is to expand the plant for a total capacity of 250 thousand units. In this second step, Hyundai will expand to produce electric vehicles, beginning in May 2022. Therefore, Hyundai Motor Indonesia needs a source for EV batteries.
The groundbreaking of the EV battery plant by the joint venture between LG Chem and Hyundai was officiated by the president of Indonesia, Ir. Joko Widodo, known as "President Jokowi". This reflects the importance of the event, demonstrating the initial steps for a move into this environmentally friendly industry. The initial capacity of the EV batteries to be built in Karawang near Jakarta is 10 GWh. This is a large facility and it is half the capacity of Ultium Cell LLC, the joint battery factory between General Motors and LG Chem, located in Lordstown, East Ohio.
At about the same time, the Central Board of Statistics of Indonesia released its trade balance report for August 2021. The trade balance registered the largest surplus this year, at $4,744.8 million. The total trade surplus for the first eight months of 2021 stands at $19,173.7 million. Exports in August reached $21,423.5 million, while imports were $16,678.7 million. Cumulative exports from January to August 2021 reached $142,006.9 million, while cumulative imports were $122,833.2 million. The trade balance showed that the level of exports has expanded further from its pre-Covid levels, and in fact has registered its best performance ever. One of the main reasons for the trade surplus has been the commodities boom, in which prices for crude palm oil and coal have risen significantly. In addition, exports of iron and steel products have quickly become among the largest exports in the country.
The Central Board of Statistics also reported the Consumer Price Index for August, which resulted in inflation of 0.03%. With that monthly inflation, year-over-year inflation stood at 1.59%, a level below the target inflation corridor of the Central Bank. With that level of year-over-year inflation, Bank Indonesia decided to keep the benchmark interest rate constant at 3.50% at its Monetary Policy Meeting in September 2021. This policy, together with other measures by the Central Bank, has succeeded in strengthening market sentiment on Indonesia.
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