Is Indonesia limiting Chinese nickel investments to gain US trade benefits?

Experts say Indonesia’s approach reflects a desire to balance national interests against geopolitical tensions as Jakarta attempts to diversify its investment partners and export markets to reduce its dependency on China.

Septian Hario Seto, deputy coordinating minister for investment and mining, told This Week in Asia on Wednesday that “there are no [efforts] by the government to limit [Chinese investments]” in the industry.

His statement came in response to questions raised by a July 26 report in the Financial Times, citing three unnamed sources, saying the Indonesian government and nickel industry players are trying “to structure new nickel investment deals with Chinese companies as minority shareholders”.

The Financial Times report said Septian confirmed the industry and government efforts to limit future Chinese investment.

“It’s not just about IRA, but also diversification,” he told the newspaper. “This is a very important policy because we do not want to get trapped in geopolitical tensions. We have to look out for national interests.”

However, the report also noted that the government is not imposing mandatory limits on ownership by Chinese companies.

“All dealings are done business-to-business,” Septian told This Week in Asia, giving the example of a deal already made by businesses in which a Chinese company would be the minority shareholder, while their Indonesian and South Korean partners would be the major shareholders, in a project valued at about US$700 million. He declined to elaborate further on the specifics of the deal.

02:30

Nickel boom in Indonesia threatens farmers’ livelihood and natural environment

Kyunghoon Kim, an associate research fellow at the Korea Institute for International Economic Policy focusing