Indonesian President Joko “Jokowi” Widodo on Tuesday inaugurated a US$129 billion “green” industrial zone in Borneo that will be built with investment from China and the United Arab Emirates and electrified by a Chinese-funded hydroelectric plant.

When complete, the 30,000-hectare (116-square-mile) industrial zone in North Kalimantan province would be nearly as big as the island-nation of Malta and would be a manufacturing hub for solar panels, batteries for electric cars , industrial silicon and other products.

The government is targeting 2024, Jokowi’s last year in power, to complete construction of the so-called Indonesian Green Industrial Zone, located in Bulungan Regency.

“A leap in Indonesia’s economic transformation starts from here,” Jokowi said during a ceremony at the site to kick off construction of the industrial zone.

The new area will create jobs and contribute significantly to state revenue, he said.

“This is a cooperation between Indonesia, Indonesian investors, UAE investors and Chinese investors – all together,” he said.

“What will be produced in North Kalimantan are almost all finished products, so they will add great value to our country because we will already sell them as finished products,” Jokowi said.

Luhut Pandjaitan, the coordinating minister for maritime affairs and investment, said the project would cost up to 1,848 trillion rupees (at least $129 billion).

So far, at least 10 major Chinese investors have pledged to invest in the zone, Luhut said.

“These are investors who have proven to have a very good investment track record and have invested tens of billions of dollars in downstream nickel production in Indonesia in recent years,” Luhut said at the ceremony. .

Luhut ministry officials declined to provide details of those Chinese investors.

Nickel, a metal mined in the Sulawesi and Moluccas regions of Indonesia, is used to make batteries for electric vehicles.

According to information from the Ministry of Energy and Mineral Resources, Chinese-related companies dominate the nickel smelting industry in Indonesia. These companies include PT Sulawesi Mining Investment, PT Virtue Dragon Industry, PT Huadi Nickel Alloy and PT Harita Nickel.

In May, China’s Zhejiang Huayou Cobalt Co. announced it would partner with EVE Energy, an electric vehicle battery maker, to establish a $2.08 billion nickel and cobalt plant in Halmahera, an island in the chain of Moluccas.

Hydroelectric power station and dams

Meanwhile, construction is already underway for a 9,000 megawatt hydroelectric plant that would power the future industrial area.

Kayan Hydro Energy is building the $17.8 billion plant with funding from the Power Construction Corporation of China (PCR), Luhut said.

The hydroelectric project, which started in 2019 and includes the construction of five dams, has attracted other investors, he said.

“At first the response was lukewarm, but towards the end of 2019 some investors started to react very seriously,” Luhut said. “And it takes courage, good execution skills and great financial strength to build a hydropower plant.”

There are, however, fears that the five dams being built on the Kayan River and other rivers in the province could threaten the region’s pristine forests and ecosystem. The Kayan River flows through the northern part of Kalimantan, the Indonesian part of the island of Borneo, where large tracts of forest have been cleared for logging, mining and palm oil cultivation.

Fabby Tumiwa, executive director of the Institute for Essential Services Reform (IESR), a private think tank, said the government should respect the industrial zone’s green label and compensate for forest areas lost during its construction.

“The president’s dream is to create a truly ‘green’ area, so everything produced there must be environmentally friendly,” Fabby said, adding that the government must impose strict rules allowing only renewable energy in the area. the region.

Indonesia, the largest and most populous country in Southeast Asia, is the eighth most polluting country in the world with 2% of global greenhouse gas emissions to its credit, according to World Resources. Institute.

“If we talk about China, nationally they are consistent on pollution control. They even have the strictest industrial standards in the world, forcing industries there to reduce the use of coal,” Fabby told BenarNews, an online news service affiliated with RFA.

“What you have to see is how good the local regulations are. Do they offer incentives and require new investors to comply with the latest and most efficient technology? »

2nd investor

China is the second largest investor in Indonesia. Its investments here have doubled to nearly $4.8 billion in 2020 from $2.4 billion in 2017.

China is funding projects in Indonesia as part of Beijing’s ambitious Belt and Road Initiative (BRI) global infrastructure construction program. These include the $6 billion Jakarta-Bandung high-speed train project, which is expected to be completed by the end of next year.

According to an AidData study published in late September, Indonesia owes China $17.28 billion in “hidden debt”, more than four times its $3.90 billion in reported sovereign debt.

Nearly 70% of China’s overseas loans go to state-owned enterprises and private sector institutions. For the most part, the debts do not show up on government balance sheets, said AidData, a US-based international development research lab.

“The ‘hidden debt’ problem is less about governments knowing they will have to repay undisclosed debts (with known monetary values) to China than about governments not knowing the monetary value of debts to China. China that they may or may not have to service in the future,” he said.

But it is not a hidden debt, according to an assistant to the coordinating ministry of economic affairs.

“These are investments from Chinese companies,” Iskandar Simorangkir told BenarNews in October.

Reported by BenarNews, an online news service affiliated with RFA.