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Indonesia breaks ground on a 'green' industrial zone on Borneo, funded by China

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President Joko "Jokowi" Widodo of Indonesia broke ground on a $129 billion "green" industrial zone on Borneo on Tuesday, which would be built with Chinese and UAE investments and powered by a Chinese-funded hydropower plant.

The 30,000-hectare (116-square-mile) industrial zone in North Kalimantan province, when completed, will be almost as big as Malta and will serve as a production hub for solar panels, electric car batteries, industrial silicon, and other products.

The government plans to finish building of the so-called Green Indonesian Industrial Estate in Bulungan regency by 2024, Jokowi's final year in office.


"From here, a leap in Indonesia's economic revolution begins," Jokowi remarked at a groundbreaking ceremony for the industrial zone.

According to him, the new zone will create jobs and generate significant money for the state.

"This is a collaboration between Indonesia, Indonesian investors, UAE investors, and Chinese investors - all of them working together," he remarked.

"Almost all of what will be produced in North Kalimantan will be finished items, so they will contribute a lot of value to our country since we will sell them fully finished," Jokowi stated.

The project might cost up to 1,848 trillion rupiah (at least $129 billion), according to Luhut Pandjaitan, the coordinating minister for maritime affairs and investment.


At least ten significant Chinese investors have committed to investing in the zone so far, according to Luhut.

"They are investors who have demonstrated to have extremely good investment track records," Luhut said at the ceremony. "They have spent tens of billions of dollars in downstream nickel production in Indonesia in recent years."

Officials from Luhut's ministry refused to give any information on the Chinese investors.

Nickel, a metal mined in Indonesia's Sulawesi and Moluccas areas, is used to make electric car batteries.


The nickel smelter business in Indonesia is dominated by Chinese-linked companies, according to data from the Ministry of Energy and Mineral Resources.
PT Sulawesi Mining Investment, PT Virtue Dragon Industry, PT Huadi Nickel Alloy, and PT Harita Nickel are among these companies.

China's Zhejiang Huayou Cobalt Co. announced in May that it would join with EVE Energy, a battery manufacturer for electric vehicles, to build a $2.08 billion nickel and cobalt factory on Halmahera, a Moluccas island.


Hydropower plant and dams


Meanwhile, work on a 9,000 megawatt hydropower facility to power the future industrial zone is already started.

The $17.8 billion facility is being built by Kayan Hydro Energy with funding from the Power Construction Corporation of China (PCR), according to Luhut.

Other investors have expressed interest in the hydroelectric project, which began in 2019 and comprises the construction of five dams, he said.

"Initially, the response was lukewarm, but towards the end of 2019, some investors were taking it seriously," Luhut added.
"And to build a hydropower plant, you'll need courage, solid execution abilities, and a lot of money."


However, there are fears that the five dams planned for the Kayan River and other rivers in the province may endanger the region's beautiful woods and ecology.
The Kayan River flows through Kalimantan, the Indonesian part of Borneo Island, where great expanses of forest have been removed for logging, mining, and palm oil cultivation.

According to Fabby Tumiwa, executive director of the Institute for Essential Services Reform (IESR), a private think tank, the government should live up to the industrial zone's green certification and compensate for forest areas lost during construction.


"The president's ambition is to create a completely 'green' area, therefore everything generated there must be environmentally friendly," Fabby said, adding that the government would have to enforce tight restrictions permitting only renewable energy to be used in the area.

According to the World Resources Institute, Indonesia, Southeast Asia's largest and most populous country, is the world's ninth most polluting country, accounting for 2% of global greenhouse-gas emissions.

"When it comes to China, they have a systematic approach to pollution control at home.
They even have the world's highest industrial norms, requiring industries to limit coal use," Fabby told BenarNews, an RFA-affiliated online news site.

"It will be interesting to observe how good the local regulations are.
Do they offer incentives and make it a requirement for new investors to use the most up-to-date, efficient technology?"

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