Jakarta. Japanese automaker Toyota is set to break ground on its bioethanol plant in Indonesia’s Lampung province in the second half of 2026, according to a senior government official, as Jakarta seeks to tap into cleaner alternatives to fossil fuel.

Deputy Investment Minister Todotua Pasaribu unveiled the plans following talks with Masahiko Maeda, Toyota Motor Asia’s chief executive for the Asian region. Toyota is partnering with the renewable subsidiary of the state-run energy giant Pertamina NRE for the joint venture.

“We intend to start the construction of the plant in Q3-Q4 of this year. The facility will be able to produce 60,000 kiloliters per annum,” Todotua told a press briefing.

Indonesia will set up a sorghum plantation over a 6,000-hectare area as a feedstock for ethanol production. The Toyota-Pertamina plant is set to enter production in 2028 -- just in time for Indonesia’s E10 ethanol blend mandate. 

Todotua said that the exact price tag for the project was still subject to review. He later revealed that the bioethanol facility alone would require an investment of “roughly between $200 million and $300 million”.

"How [Pertamina and Toyota] plan to divide the investment will depend on the business-to-business talks," Todotua said.

Maeda told reporters that the company would open to using bioethanol for both its passenger and commercial vehicles. The Indonesian Automotive Industry Association (Gaikindo) reported that Toyota made up 30.4% of the sold passenger cars in the first quarter of 2026, totaling 64,416 units.

Indonesia is looking at the bioethanol alternative more than ever after Iran’s war-induced closure of the Strait of Hormuz -- the world's key oil shipping channel -- caused fuel prices to soar. The resource-rich country aims to start with E10, namely having a mandatory 10% ethanol content in Indonesia’s gasoline by 2028. Toyota had previously showcased its Fortuner Flexy Fuel prototype to Indonesian consumers, which the company has heavily modified to run entirely on bioethanol (E100).

Indonesia registered $3.1 billion in Japanese investments throughout 2025, making it the country’s fifth-largest foreign investor, government data showed.