Indonesia Bets on Solar Manufacturing Amid US-China Trade Row
Tsvetana Paraskova

Indonesia, the largest economy in Southeast Asia, is betting big on attracting investment in its solar manufacturing industry, looking to take advantage of the U.S. anti-dumping tariffs on China and some of Indonesia’s Southeast Asian neighbors.  

China, Cambodia, Malaysia, Thailand, and Vietnam face U.S. tariffs and restrictions in exporting their solar products, including panels and other equipment, as the United States has determined that they have been engaged in dumping practices.  

Indonesia has been spared any such tariffs, so far. That is why it is looking to attract foreign companies, including Chinese and American, to relocate their manufacturing in the Southeast Asian country by boosting incentives for producers of solar equipment. 

However, the U.S. tariffs could reach Indonesia at some point, analysts tell the South China Morning Post.

Until this happens, Indonesia is looking to make the most of being one of the few Southeast Asian manufacturing bases not hit by levies in the United States. 

Last year, Indonesia halved the minimum level for local content requirement for solar power plants to 20% from 40% in a bid to attract more investments in its renewable energy industry and get at least half of the funding for clean energy projects from multilateral foreign lenders. 

The strategy seems to have started to pay off. 

Singapore–based solar PV manufacturer EliTe Solar last month commissioned its solar cell production facility in Indonesia. EliTe Solar has a global expansion strategy and is committed to optimizing Indonesia’s energy landscape, promoting clean energy adoption, and driving economic and social development in the region. 

In September 2024, U.S. Houston-based photovoltaic module manufacturer SEG Solar (SEG) started construction of its integrated photovoltaic industrial park in Kawasan Industri Terpadu Batang, Central Java, Indonesia. 

The industrial park is part of SEG’s commitment to global expansion and investment in Indonesia, aiming to establish a 5 gigawatt (GW) annual production capacity for silicon ingots, wafers, cells, and modules, making it the largest vertically integrated photovoltaic industrial park in Indonesia.

SEG will also look to cooperate with other PV component suppliers to establish manufacturing facilities in Indonesia, paving the way for comprehensive business development across the entire PV value chain. 

“The solar cells and solar panels produced in this industry park will support the Indonesian government in its carbon emission reduction plan and supply SEG Solar’s U.S. in Houston module factory, ensuring the traceability and reliability of the supply chain,” said Michael Eden, SEG Solar CO-founder and General Counsel. 

Indonesia is attracting Chinese manufacturers, too.  

While Chinese solar firms shut down factories in Vietnam and the other Southeast Asian nations currently under U.S. tariffs, they open solar manufacturing plants in Indonesia and Laos, which are not on Washington’s list of measures against dumping practices, Reuters reported at the end of last year. 

“It's not that hard to move. You set up and you play the game again. The design of the rules is such that the U.S. is usually one step behind,” William A. Reinsch, a former trade official in the Clinton administration and senior adviser at the Center for Strategic and International Studies, told Reuters at the time. 

Yet, the U.S. could soon catch up with the relocation of Chinese solar manufacturers around Southeast Asia to avoid American tariffs, according to analysts. 

“There may be a time lag for the US government to respond, but sooner or later, the cat will chase the mouse,” Putra Adhiguna, managing director at the Energy Shift Institute in Indonesia, told the South China Morning Post.

Moreover, Indonesia and other Southeast Asian countries betting on booming solar manufacturing for exports to the U.S. need to boost their domestic demand to have sustainable growth in the sector regardless of the U.S. protectionist policies, Putra told the publication. 

“These countries will need to spur domestic demand for their renewable energy supply chain to grow.” 

By Tsvetana Paraskova for Oilprice.com

Tsvetana is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. 

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