Indonesia eyes strategic role in global supply chains amid geopolitical shifts

By Cepi Setiadi

Indonesia is positioning itself as a key global hub for critical minerals and supply chain resilience amid rising geopolitical tensions and shifting trade dynamics, a senior investment official said on Wednesday.

Speaking at a lunch briefing titled “Indonesia’s Critical Minerals: Market Trends, Supply Chains and Scenario Planning in a Geopolitically Turbulent World,” hosted by Fastmarkets, Andre Omer Siregar, Deputy for Investment Cooperation at the Ministry of Investment and Downstream Industry, said Indonesia is leveraging its resource wealth and neutral foreign policy stance to attract global investors seeking stability.

Amid growing fragmentation driven by trade tensions, technological competition and supply chain realignment, Indonesia is increasingly seen as a strategic partner as companies diversify away from traditional manufacturing hubs.

“As global firms reconfigure supply chains, there is a growing emphasis on locations that offer economic potential, political stability and resource security. Indonesia is well-positioned in this regard,” Andre said.

Indonesia, one of the world’s largest producers of critical minerals, holds a dominant position in commodities such as nickel, tin and cobalt—materials essential for electric vehicles (EVs), semiconductors and renewable energy technologies.

Downstream push and investment growth

Under President Prabowo Subianto, Indonesia is accelerating downstream industrialization to shift from raw material exports to value-added production, including EV batteries, solar panels and semiconductors.

The government is targeting 8% economic growth by 2029, requiring an estimated $814 billion in investment over the next five years, with annual investment growth projected at more than 15%.

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Indonesia recorded total investment realization of Rp1,931 trillion in 2025, up 12.7% year-on-year and exceeding official targets. The downstream sector contributed Rp584 trillion, or 30% of total investment, driven largely by the mineral industry.

Andre said Indonesia accounts for around 42% of global nickel production, reinforcing its role in the global energy transition and technology supply chains.

“These are not just raw materials—they are strategic inputs for semiconductors, EV batteries and renewable energy infrastructure,” he said.

Indonesia is also developing integrated downstream ecosystems, including EV battery production and emerging sectors such as hydrogen and biofuels, to support a low-carbon economy.

Regulatory reforms and incentives

To attract investment, the government continues to streamline licensing and improve legal certainty through reforms such as the Online Single Submission (OSS) system.

Incentives include tax reductions, import duty exemptions and super deductions for research and development and workforce training, aimed at boosting industrial competitiveness.

Positioning for a fragmented world

Andre said rising geopolitical tensions, including trade conflicts and instability in the Middle East, have increased volatility in global markets, particularly in energy and logistics.

However, Indonesia’s independent and active foreign policy enables it to maintain engagement across geopolitical blocs, enhancing its appeal as a neutral and reliable partner.

“In a fragmented world, resilience, adaptability and trust are becoming key factors. Indonesia offers these qualities,” he said.

With its strong resource base, expanding downstream capacity and ongoing reforms, Indonesia is positioning itself not only as a major producer but also as a strategic hub in future global supply chains

Editing by Reiner Simanjuntak