Jakarta. Indonesia is brushing off concerns over South Korean conglomerate LG’s decision to withdraw from a multibillion-dollar electric vehicle (EV) battery investment. The government remains committed to building a domestic EV supply chain and is now looking for new partners, including those from the Middle East and the United States.

State-Owned Enterprises Minister Erick Thohir said the exit of the LG-led consortium will not derail the country’s ambitions to become a major EV player, despite the consortium’s plan to abandon a project worth 11 trillion won (US$7.7 billion).

“LG’s decision doesn’t slow our momentum. We are still moving forward aggressively to develop an EV supply chain that supports Indonesia’s long-term vision,” Erick told reporters in Jakarta on Tuesday.

The government is now actively courting potential investors from Saudi Arabia, the United Arab Emirates, and Qatar to fill the vacuum left by the South Korean group. The initiative also includes outreach to US firms amid bilateral trade discussions on US tariffs.

“We are keeping our doors open, especially as we explore closer trade ties with the US,” Thohir said.

South Korean news agency Yonhap reported last Friday that LG Energy Solution, along with LG Chem, LX International Corp, and other consortium partners, has decided to cancel its Indonesian investment. The consortium cited shifting global market dynamics and slowing EV demand as primary reasons behind the pullout.

"Considering the current market and investment environment, we have opted to exit the project," an LG Energy Solution official said.

The LG-led group had been collaborating with the Indonesian government and state-owned enterprises to establish an end-to-end battery value chain, ranging from raw material procurement to cathode material production and battery cell manufacturing. Indonesia’s abundant nickel reserves had made it a prime location for such an initiative.

Despite the setback, LG Energy Solution said it will maintain its other business operations in the country.

The withdrawal comes just months after Indonesia launched Southeast Asia’s first EV battery cell plant in Karawang, West Java, in July 2024. The plant was developed by HLI Green Power, a joint venture between Hyundai, LG Energy Solution, and Indonesia Battery Corporation.

Phase one of the project involves a $1.1 billion investment to produce 10 gigawatt-hours (GWh) worth of battery cells annually, enough to power 150,000 electric vehicles. A second phase, valued at $2 billion, is expected to double that capacity to 20 GWh.