1. Jokowi's Gamble
January 1, 2020. Before the first day of the new year had fully dawned, the Indonesian government quietly flipped a switch. A total ban on the export of nickel ore. A country holding more than 40 percent of the world's nickel reserves had declared it would cut off raw-material exports.
At the Istana palace in Jakarta, President Joko Widodo answered reporters' questions without flinching. Mining industries around the world, stainless-steel manufacturers, the European Commission, Japanese steelmakers — all were stunned. The EU's protest that this violated WTO agreements was already an expected move. Jokowi did not care. He had already finished his calculation.
Jokowi is a carpenter's son. He grew up in a one-room wooden house on the bank of the Solo River. He built a traditional furniture company from scratch, became a businessman, then served as mayor of Solo before becoming governor of Jakarta. He was neither from the elite military establishment nor a member of the Suharto-era power network. That background shaped his judgment. He had never believed in a country made wealthy by selling raw materials. The economy of Jakarta's poorer neighborhoods does not run on raw materials. Processing has to happen before jobs appear, and jobs have to appear before a middle class can grow.
Selling ore as-is fetches tens of dollars per ton. Process it into ferronickel and the price runs to hundreds of dollars. Turn it into battery precursor materials and it climbs to thousands. Each rung of the ladder multiplied the value. Indonesia had long been selling from the first rung. Now it would climb to the second, then the third. Jokowi made this decision in 2020, but the idea had already been written into the 2015 National Industrial Development Master Plan (RIPIN).
The world expected the gamble to fail. Indonesia had no smelters. No technology. No capital. But Jokowi had something else — what lay underground.
2. What the Numbers Say
Look at the numbers. In 2020, before the export ban, the value of Indonesia's nickel-related exports was around $4 billion. By 2023 that figure had surpassed $22 billion. An increase of more than 450 percent in three years. The result of a country that once sold ore beginning to sell intermediate goods and processed products.
Ferronickel exports tripled from $5 billion in 2020 to $15 billion in 2023. Exports of nickel intermediate products surged from $800 million to $7 billion over the same period — nearly ninefold. This is the reality of the resource ladder. Sell raw materials and you get $4 billion. Sell processed goods and you get $22 billion. That difference was the value created by Indonesia's choice.
The logic of the ladder was simple. Block the exports. Foreign capital comes in and builds smelters on Indonesian soil. Processing happens inside Indonesia. Export value rises. Jobs are created. Jokowi did not stop the logic at nickel. In June 2023 he banned bauxite (the raw material for aluminum) exports as well. He signaled that copper, tin, and cobalt would follow. The resource-ladder strategy had become the operating principle of the national economy as a whole — not a policy for a single mineral.
The WTO ruled against Indonesia in 2022. A violation of the GATT agreement. Indonesia appealed. And because of the structural paralysis of the WTO's appellate body, the dispute froze. Jokowi had read the gap in international norms precisely. For a resource-holding country with leverage, a WTO ruling against it was not a decisive barrier.
The critical element of this strategy was timing. 2020 was the year before the electric-vehicle market reached critical mass. Nickel was becoming the second-most important metal in batteries, after lithium. At the moment Tesla, GM, and Volkswagen were publicly committing to the EV transition, the country controlling half of the world's supply issued an export ban. Jokowi's gamble was not reckless. It was a move that identified the precise vulnerability in the supply chain.
As of 2024, Indonesia accounts for roughly 60 percent of global nickel mine output. In the same year, as production fell in both Australia and the Philippines, Indonesia's output rose 8 percent. As the world's attempts to find alternative suppliers accelerated, Indonesia's share kept climbing — as if in inverse proportion. The physical foundation of resource leverage was that solid.
3. The Chinese Shadow
Behind this success, however, there is another story.
As of early 2025, 44 nickel smelters are operating in Indonesia. Another 21 are under construction. More than 90 percent of these smelters were built by Chinese companies. More than 75 percent of total refining capacity is under the control of Chinese stakeholders. Cumulative investment by Chinese companies from 2010 through 2024 is estimated to have reached $60 billion.
Some 82 percent of Indonesia's nickel exports go to China. A single customer. Ferronickel exports go to China at a rate of 97 percent. The value chain has been climbed — but China stands at the top of that ladder. Jokowi pulled in foreign capital to build smelters, but most of that capital came from China, and most of what those smelters produce flows back to China. A new form of dependence had been created. From dependence on raw materials to dependence on processing.
Morowali, Sulawesi. This is the site of IMIP (Indonesia Morowali Industrial Park), developed under the leadership of China's Tsingshan Holding Group. Cross the main gate of the industrial park and Chinese-language signs are the first thing you see — restaurants, dormitories, parts warehouses: Chinese precedes Indonesian. In the roar and dust of smelters that never stop around the clock, Chinese managers give instructions in Chinese, and Indonesian workers respond with gestures and a few words of Chinese without interpreters. On a worksite where the languages do not meet, safety accidents recur; resentment at wage disparities accumulates; but as long as the employer is a Chinese company, the channels for complaint are narrow. Every six hours, smoke rising from the smelter furnaces turns the sky gray and corrodes the roof tiles of local homes. Mining runoff pollutes fields and rivers. In a survey of coastal fishing communities, 98.4 percent of respondents said the environment had been harmed. The sea near nickel mines turns red.
On the same island of Sulawesi, 400 kilometers east of Morowali, in Sorowako. Bagus Sutomo, 38, is a dump-truck driver for PT Vale Indonesia. He spent 15 years hauling nickel ore in a 150-ton truck from the mining site to the smelter. He woke at 5 a.m., took a nasi goreng lunch box his wife had packed, and headed to the mine. By the time he finished a 12-hour shift, his children were already asleep. Monthly pay: roughly 12 million rupiah — about ₩750,000. Three times his father's income from farming in Solo. He covered two children's school fees and bought a small house in Sorowako. In 2024, when Komatsu's Autonomous Haulage System (AHS) was expanded, 28 of the 70-person hauling team received termination notices. Bagus was reassigned to remote-monitoring support — watching the routes of unmanned trucks on screens in an air-conditioned control room. His pay fell 30 percent, and the road sense and load judgment he had built over 15 years behind the wheel no longer had any use. While Jokowi's resource-ladder strategy was lifting Indonesia's export value by 450 percent, the life of Bagus — standing at the bottom rung of that ladder — moved downward instead. The processing plants were built by Chinese companies, and the skilled technicians also came from China. The government's announcement that the value-added of resources was rising did not reach Sorowako.
At an advanced battery factory in Karawang, robotic arms assemble battery cells under the white light of a cleanroom. Six hours away in Sulawesi, the nickel that makes those batteries possible comes out this way. The green image of the electric vehicle does not illuminate the entire supply chain.
Jokowi knew this paradox his resource nationalism had produced. His slogan was hilirisasi — downstream industrialization — the will to trap value-added domestically by blocking the flow of resources. But under conditions where both capital and technology had to be drawn from abroad, downstream industrialization inevitably becomes entangled with the interests of foreign companies. To use Chinese capital to escape dependence on China — this paradox is the core contradiction of Indonesia's resource strategy.
4. The Paradox of Resource Nationalism Without Technology
In Chapter 7 we saw ASML's technology monopoly. Indonesia's monopoly is different — it rests not on technology but on what lies underground. That difference determines everything.
ASML's monopoly was built by human hands over thirty years. A moat created by $9 billion in R&D, thousands of engineers, and deep collaboration with Carl Zeiss and TRUMPF. To replicate Zeiss's mirrors you need Zeiss's fifteen years; to produce TRUMPF's lasers you need TRUMPF's ten years. The only way to cross this moat is to buy time. And time cannot be bought with money.
Indonesia's monopoly is different. Nickel is not something Indonesia made. It is something geology provided. The strength and the weakness both flow from this. The strength: it does not need to be built — it is already underground. The weakness: it can be bypassed.
LFP (Lithium Iron Phosphate) batteries are on the rise. Their energy density is lower than nickel-based batteries, but they are cheaper, safer, and longer-lived. This technology, led by CATL and BYD, uses no nickel whatsoever. As of 2023, LFP's share of the global electric-vehicle battery market had exceeded 40 percent. In the short-range urban EV, bus, and commercial-vehicle markets, LFP's share is growing rapidly.
CATL achieved a range of 700 kilometers on a single charge with its 2024 Shenxing LFP battery, and BYD's Blade Battery passed the nail-penetration test, resetting the standard for safety. Both companies are pushing LFP energy density higher every year, and a path is opening that could encroach on the long-range premium market where nickel-based batteries had maintained their only remaining advantage. Estimates of how quickly this transition will be complete diverge. Optimists see LFP reaching 70 percent of the total market by 2028; conservative analyses suggest 2032. Either way, Indonesia has fewer than ten years — time in which it must convert resource leverage into technological capability.
Indonesia's resource indispensability has an expiration date. Jokowi had to build technological capability within that window and keep climbing the ladder. Yet as of 2024, Indonesia's electric-vehicle exports amount to roughly $12 million. Against Thailand's $363 million and Vietnam's $192 million, that figure is marginal. The nickel is there. The batteries are made by China. In finished vehicles, Thailand and Vietnam are ahead. Indonesia remains standing somewhere in the middle of the ladder.
The structure, laid out plainly: Indonesia obtained leverage through resources. With that leverage it attracted foreign capital and moved up the processing chain. But the technology and capital at the processing level remain in foreign hands — primarily Chinese hands. Export value has risen, but the parties controlling that value chain have not changed. Leverage raised the negotiating power; it did not produce self-sufficiency. This is the structural ceiling of resource nationalism.
5. The Structural Limits of Resource Leverage
Taiwan staked everything on a single capability — semiconductor manufacturing. That concentration produced TSMC, and TSMC made Taiwan irreplaceable. Taiwan's indispensability was designed — the product of a deliberate choice that began with a phone call from Morris Chang in 1985.
Indonesia's indispensability is different. Nickel was not chosen; it was given. And indispensability grounded in what is given disappears the moment technology finds a way around it. Jokowi knew this structural vulnerability. That is why he pushed to climb the value chain — toward battery-cell production, toward EV assembly. But climbing the value chain requires technology, and the ones who hold the technology are not Indonesia but Korea, China, and Japan.
Indonesia's dilemma is this. It can deploy resource leverage to attract foreign companies. But if those companies do not transfer technology, Indonesia can be trapped at the processing stage forever. Without technology transfer, the ladder stops. This is a modern variant of the "resource curse" that many resource-rich countries experienced in the 1990s and 2000s.
Per capita GDP is around $5,200. The World Bank has assessed that for Indonesia to become a high-income country by 2045 it would take "a miracle." The middle-class share fell from 21.4 percent in 2019 to 17.1 percent in 2024. The wealth generated by the nickel boom is not permeating the broader economy.
There is also the human-capital problem. Indonesia's Human Capital Index (HCI) is 0.54 — 60 percent of Singapore's 0.88. It is estimated that an additional 9 million ICT professionals will be needed by 2030, yet only 40,000–50,000 graduates enter information, communications, and computing fields each year. Smelters can be built. But cultivating, domestically, the technical workers needed to operate those smelters, improve them, and move to the next stage is a fundamentally different problem. Among the five conditions of indispensability, when the reproduction of human capital falters, the other conditions falter with it.
6. The Warning History Repeats
In Chapter 1 we saw the Hanseatic League's triple monopoly bypassed by technological innovation. The Hanseatic League enjoyed two hundred years of prosperity through monopolistic control over the Baltic and North Sea trade's core commodities — herring, salt, timber, grain. But in the late fifteenth century, advances in shipbuilding technology capable of sailing farther seas and the discovery of new trade routes bypassed that monopoly. The commodities still had value. What changed was the route to those commodities.
Resource monopolies follow the same pattern. In the nineteenth century, whale oil was indispensable for lighting and machinery lubrication. When petroleum appeared, whale oil's indispensability vanished overnight. In the early twentieth century, Chilean nitrate (saltpeter) was a core ingredient of gunpowder and fertilizer. When the Haber-Bosch process developed a method of fixing nitrogen from the air, Chile's monopoly ended.
Technology bypassing resource monopolies is less an exception than a law of history. The rise of LFP batteries is this law playing out in the present. And when solid-state batteries are commercialized — Samsung SDI and Toyota are competing toward a 2027 target — the physical design of batteries will change, and which minerals become indispensable will shift with it. The Hanseatic League's herring lost value not because herring populations declined. New trade routes bypassed the herring. Nickel may not be different.
The time available for converting resource leverage into technological capability is limited. When Jokowi flipped the switch in 2020, that clock started.
How fast that clock is running remains unclear. For the entire automobile market to transition to LFP, charging infrastructure, range requirements, and consumer preferences all interact in complicated ways. In the premium EV market, nickel-based batteries still hold an advantage in energy density. The moment at which Indonesia's resource indispensability is fully exhausted is still hard to predict. But one thing is certain — that moment is not permanent. And Indonesia knows this better than anyone.
7. From Underground to Technology
Apply the core formula and Indonesia's story is unfinished. Resource control (resource monopoly) created concentration of capital ($22 billion in export growth, $65 billion in Chinese investment). But what that concentration of capital produced was not Indonesian technological capability — it was Chinese smelting capability on Indonesian soil. Social tension — from environmental destruction, dependence on Chinese capital, and the absence of technology transfer — is already surfacing. Institutional redesign — a genuine transition toward technological independence — has not yet happened.
Two clocks are running simultaneously for Indonesia's indispensability. One is the clock of opportunity: the time, while its position as the world's largest nickel producer still holds, in which this leverage can be used to acquire technological capability. The other is the clock of threat: the speed at which LFP batteries and solid-state battery technology displace nickel demand. Which of the two clocks hits its limit first — that is the central bet of Indonesia's strategy.
Jokowi's successor, President Prabowo Subianto, joined BRICS in 2025, drawing closer to the Chinese orbit. At the same time, Indonesia has remained in the American-led IPEF. Prabowo's diplomatic philosophy — "a thousand friends is not enough; one enemy is too many" — is Indonesia's characteristic strategic ambiguity. Without choosing between the United States and China, it aims to be indispensable to both. But this strategy carries costs as well. A situation may emerge in which neither side trusts Indonesia as a core technology partner. Resource leverage can earn a seat at the negotiating table. But the key that opens the door to technology transfer sits elsewhere.
Indonesia is the largest of the in-between countries in this book. A population of 280 million — fourth in the world. It accounts for more than a third of Southeast Asian GDP. Its size generated leverage, and its size is also why the pace of change is slow. The agility of a small state and the inertia of a large state operate simultaneously. The fact that a single switch Jokowi flipped in 2020 shook the global supply chain is this country's possibility. Whether that switch will reach the top of the technology ladder is this country's challenge.
Can resources lead to technological independence? The answer has not yet come. Indonesia is conducting the world's most important resource-ladder experiment. Where that ladder will stop, whether it can reach the top before technological innovation dismantles the ladder itself — that is the question Indonesia has posed to the twenty-first century.
Korea in the Mirror
The face of Korea that Indonesia reflects is "the vulnerable rear of a technology power without resources." Korea has battery technology. But it does not have the minerals that go into those batteries. And a substantial portion of those minerals exists on Indonesian soil in ways Korea does not control.
The significance of HLI Green Power. In April 2024, the HLI Green Power factory in the Karawang Industrial Estate in West Java produced its first battery cells. A joint venture in which LG Energy Solution and Hyundai Motor Group each hold a 50 percent stake. Investment: $1.1 billion — roughly ₩1.5 trillion. Annual production capacity of 10 GWh, enough to supply more than 150,000 electric vehicles. Indonesia's first electric-vehicle battery production facility. This is not simply a factory. It is Korean companies responding to the Indonesian government's demand to close the "resources-batteries-finished vehicles" value chain inside Indonesia — by building a battery plant at the source of the nickel. Indonesia's resource leverage moved Korean companies.
The structural vulnerability of Korea's battery trio. Korea's three battery companies — LG Energy Solution, Samsung SDI, and SK On — all have strengths in nickel-based batteries (NMC, NCMA). Their core products cannot be made without Indonesian nickel. The fact that Chinese companies control more than 75 percent of Indonesian nickel smelting means Korean battery companies are indirectly dependent on a structure in which raw-material supply is controlled by Chinese capital. HLI Green Power is an attempt to build a direct relationship with the source country, bypassing that dependence structure. Yet the fact that a separate $980 million battery project led by LG and advancing in 2024 was acquired by China's Huayou Cobalt shows that Korea and China are competing within the same Indonesia for control of the supply chain.
The asymmetry of LFP risk. The rise of LFP batteries is a threat to Indonesia — and equally a threat to Korean battery companies. LFP, led by CATL and BYD, uses no nickel. Chinese companies are eroding Korean companies' areas of strength with a technology that needs no nickel at all. Korean battery companies must maintain competitiveness with nickel-based batteries in the high-energy-density premium market, while simultaneously developing technology to counter LFP, and while also securing access to Indonesian raw materials. Three fronts are open at once.
Contrast with Chapter 7's ASML. In Chapter 7 we saw ASML's technology monopoly. ASML is an indispensability created by technology. Indonesia is an indispensability created by resources. Korea depends on both types of indispensability while controlling neither. Equipment comes from Veldhoven; raw materials come from Sulawesi. The switch in Veldhoven is held by Washington, and 75 percent of the smelters in Sulawesi are operated by China. The supply-chain map of the Korean battery industry is not drawn by Korea.
What Korea's alternative is. What Indonesia's dependence on China implies is clear. For Korea to access Indonesian nickel, it must bypass the smelting stage already occupied by China. Forming direct partnerships at the battery-cell stage — as HLI Green Power does — is that bypass. But this alone is not enough. If Korean companies can make a genuine contribution to building Indonesia's technological capability — battery talent education, process technology transfer, R&D collaboration — Indonesia too will have reason to treat Korea not merely as a capital investor but as a technology partner. Only when the resource partnership deepens into a technology partnership does the in-between strategy of both countries reinforce the other.
Indonesia's lesson is paradoxical. Resource leverage without technological capability leads back to technological dependence. Technological capability without resources leaves you exposed to raw-material vulnerability. This is the core lesson Korea must learn from Indonesia.
Where Korea differs. Indonesia had resources but no technology, so it drew in Chinese capital. Korea has technology but no resources, so it built factories in Indonesia. The two countries share the same vulnerability from opposite ends of the supply chain. Indonesia's smelters are operated by China; Korea's batteries are made from raw materials controlled by Chinese capital. A technology power and a resource power need each other — and China is the one filling the space between them.
What Korea must learn. What Korea — standing in the between, with neither resources nor full resource access — needs is the simultaneous strengthening of resource partnerships and technology monopoly. Just as Indonesia climbed the ladder without technological capability and stopped in the middle, Korea cannot resolve the structural vulnerability of the battery supply chain with technological capability alone and no access to raw materials. The joint factory in Karawang is one step in that direction. Before the LFP transition erodes nickel demand, that step must go deeper.
The next mirror is a country trying to buy indispensability not with resources or technology, but with capital — the UAE.