Ditulis oleh: Emmanuel Ariananto Waluyo Adi
Artikel diambil dari 10 tulisan terbaik dalam kegiatan Nagantara Essay Competition 2025 kategori Profesional
Indonesia and China have forged a rapidly expanding partnership in trade and investment, with China as Indonesia’s leading foreign investor in recent years. Renewable energy stands out as a strategic focus area for this bilateral engagement, aligning with both countries’ climate goals and economic interests. Key Indonesian commitments – such as its enhanced NDC under the Paris Agreement underscore the urgency of shifting from fossil fuels to renewables. In this context, legal and investment frameworks are pivotal. The Indonesian government has issued new regulations (for example, Presidential Regulation No. 112 of 2022) to accelerate renewable projects, and China brings deep expertise in clean-tech development and financing. These dynamics present opportunities for instance, China’s vast clean-energy investment could finance Indonesia’s transition and create new industries. At the same time, there are risks to manage, including potential policy misalignment, regulatory uncertainty, and dependence on foreign supply chains. This essay examines how legal synergies and investment flows in the Indonesia–China partnership can be leveraged for clean-energy growth, while mitigating associated legal and strategic risks.
Opportunities: Renewable Energy and Bilateral Cooperation
Both Indonesia and China recognize a “moral responsibility” to lead in the clean-energy transition, given their status as the world’s largest emerging economies and major emitters . China’s leadership in renewable technology offers clear benefits for Indonesia. As one expert notes, “China can assist Indonesia with infrastructure investment and the development of renewable energy technology industries, institutional capacity building, and supporting the decarbonization of mineral processing and downstream industries” . In practice, this has begun to materialize. For example, Chinese firms have already invested in Indonesian solar manufacturing: Trina Solar (China) and SEG Solar (US
backed) have opened solar-panel factories in Central Java. More broadly, China’s Belt and Road Initiative (BRI) has directed nearly half of its overseas energy investments (about US$20 billion in 2020) into renewable projects in the Indo-Pacific, signaling strong financial capacity to support Indonesia’s goals.
Indonesia’s immense renewable potential amplifies these opportunities. Analysis by IESR finds Indonesia has over 7,700 GW of technical renewable capacity (more than twice official estimates), especially in solar and wind resources. Joint Indonesia–China initiatives can tap this potential. Scholars and policymakers propose a China–Indonesia
Solar Partnership, involving co-development of next-generation solar cells and deploying solar plus battery-storage across Indonesian islands. This collaborative innovation ecosystem would leverage China’s technological mastery and Indonesia’s abundant solar resource. As IESR observes, such a partnership is “ideal for both countries, leveraging China’s mastery of solar cell technology and Indonesia’s solar energy potential and need to build a green technology industry”. The envisaged projects are win– win: Indonesia gains technology transfer and new manufacturing jobs, while China expands markets for its clean-energy firms.
These initiatives promise broader economic and diplomatic benefits. The Indonesian mission notes that the clean-energy transition will “not only reduce emissions but also create many new jobs and investment opportunities” . By industrializing renewables (e.g. solar-cell production) and green mobility, Indonesia can diversify its economy and absorb Chinese capital in productive, sustainable ways. Culturally, educational exchanges and joint R&D foster mutual understanding and trust. In sum, when facilitated by coherent legal frameworks, bilateral renewable-energy cooperation can strengthen the overall Indonesia–China synergy across economy, law, and culture.
Legal Frameworks and Investment Flows: Enablers and Challenges
Realizing these opportunities depends heavily on robust legal and policy frameworks in Indonesia. On the positive side, Indonesia has recently reformed its investment laws and energy regulations to attract foreign capital in renewables. For example, the 2022 Renewable Energy Supply Regulation (Presidential Regulation 112/2022) introduces an updated tariff regime and streamlined licensing for renewable power. Similarly, Indonesia’s omnibus law reforms have eased investment restrictions in many sectors (though with mixed results). Such measures can send strong signals to investors: Indonesia is committed to enabling clean-energy projects through clear, binding rules.
Legal synergies also arise from bilateral agreements. Indonesia and China have expressed intent to deepen legal cooperation under their strategic partnership. Joint working groups on energy and climate aim to harmonize technical standards (e.g. grid connection, equipment certification) and expedite approval processes for cross-border projects. Strengthening intellectual-property protections and knowledge-sharing agreements (for example, on battery technology) can secure technology transfers, addressing companies’ concerns. Moreover, Indonesia is negotiating to join multilateral finance initiatives (like the Just Energy Transition Partnerships) that can bring co-financing from G7 countries alongside Chinese investment. Legal coordination within these forums can amplify Indonesian bargaining power and reduce reliance on any single partner.
Nonetheless, significant challenges remain. Indonesia’s legal environment is complex: laws can change frequently, and decentralized authority (provinces, municipalities) adds variability. For Chinese investors unused to Indonesia’s system, this poses operational risk. For instance, local land-permitting laws, domestic-content requirements, and ambiguous tariff-setting procedures have slowed some past geothermal and solar projects. If these rules are unclear or applied inconsistently, projects may stall or become unprofitable. Therefore, clarity and stability of regulations are vital. Indonesian authorities can address this by codifying investment guarantees (such as protection against expropriation, dispute resolution mechanisms, and stabilization clauses) in contracts with Chinese firms. Updating the Negative Investment List and streamlining bureaucratic processes (e.g. one-stop investment services) will also reduce friction.
Risks in Bilateral Investment Flows
Even with good laws, broader strategic and financial risks warrant attention. China’s dominant role in global renewables is double-edged. On one hand, Chinese financing and technology are indispensable to scaling up renewables quickly. On the other hand, there
is risk of overdependence. Analysts note that “China is the largest financer of renewable energy projects in the Indo-Pacific”, and more than half of its BRI energy investments in 2020 were in renewables. This extensive engagement is crucial for climate goals, but it raises concerns among U.S. and European partners about Beijing leveraging its investments for political influence. Indonesian policymakers must balance these geopolitics. They should welcome the investment, while diversifying funding sources to avoid excessive reliance on any single country’s technology or capital. For example, collaborating with multilateral development banks or other Asian investors on projects can mitigate influence risks.
Another risk lies in supply-chain concentration. China currently controls the vast majority of critical components for clean energy: over 80% of global solar-panel manufacturing stages and about 90% of rare-earth metal processing. This dominance means that disruptions (e.g. export restrictions or factory outages) could hamper Indonesia’s green
projects or make them more expensive. Indeed, one analyst warns that “China’s domination of the renewable energy market is a significant risk”, citing a scenario where China’s wind and solar firms exploit a gas-supply crisis to expand markets. For Indonesia, such vulnerabilities suggest the need to develop local capacity and diversify sources. Policies could include incentivizing domestic assembly of solar panels, or collaborating with third-party manufacturers (for instance, in other ASEAN countries or India) to reduce single-point dependencies. Legal measures might require transfer of essential technology to Indonesian partners, ensuring local skill-building.
There are also financial risks. Large-scale renewable projects are capital-intensive and often have long payback periods. If costs rise unexpectedly (due to currency shifts, tariff changes, or supply-chain bottlenecks), investors may seek to renegotiate terms or exit projects, leading to disputes. Establishing solid legal safeguards (e.g. clear renewable energy tariffs, transparent bidding processes, and enforceable contracts) can manage these risks. Indonesia’s regulators should ensure timely payment for power purchases and avoid retroactive rule changes that undermine investor confidence.
Policy Recommendations and Conclusion
To harness opportunities while containing risks, Indonesia should pursue several policies. First, continue legal reforms to make renewable investments transparent and predictable. This includes finalizing supportive regulations (such as updated power purchase agreements) and improving coordination among ministries. Second, deepen bilateral legal dialogues with China: expand existing forums (like the Joint Commission on Strategic Partnership) to cover renewable energy law, and pursue mutual recognition of standards. Such steps would smooth joint venture negotiations and accelerate project approvals. Third, bolster technical cooperation: invest in joint R&D centers and training programs so that Indonesian agencies and companies better understand advanced renewable technologies. This cultural and institutional exchange will pay off in more resilient projects.
The responsibility for advancing Indonesia-China renewable energy cooperation must be distributed across relevant ministries and institutions. The Ministry of Environment (KLH) should ensure that all bilateral projects comply with environmental safeguards and
emissions reduction commitments under Indonesia’s updated NDC. The Ministry of Energy and Mineral Resources must coordinate renewable energy roadmaps, set transparent tariffs, and guide the phase-out of coal while encouraging clean energy investment. The Ministry of Industry should promote domestic manufacturing of solar panels, batteries, and green technologies, ensuring that Chinese investment supports Indonesia’s industrial downstreaming strategy. The Ministry of Investment is tasked with providing one-stop licensing and investor guarantees, cutting bureaucratic delays that have historically deterred foreign partners. Meanwhile, the Ministry of Trade needs to facilitate market access for green products and negotiate trade rules that align with Indonesia’s renewable goals. The Coordinating Ministry for Infrastructure and Regional Development must integrate these policies under a coherent cross-sectoral strategy. The Ministry of Foreign Affairs should anchor cooperation within the broader diplomatic framework, including the commemoration of 75 years of bilateral relations and Indonesia’s role in BRICS and G20 platforms. The Ministry of Home Affairs plays a role in synchronizing national policy with regional governments to avoid local bottlenecks in land acquisition and permitting. Finally, state-owned enterprises such as PLN and strategic BUMN like Danantara (in line with Law No. 19 of 2023 on State-Owned Enterprises, which affirms their developmental mandate) have complementary roles: PLN in executing power projects with Chinese partners, and Danantara in shaping public communication so that the partnership is perceived as inclusive and legitimate. When these ministries and agencies fulfill their tasks in harmony, Indonesia can maximize the legal and investment synergy with China while safeguarding its sovereignty, environment, and long-term development.
Moreover, Indonesia should actively engage multilateral partners to complement Chinese investments. Joining international green financing initiatives can attract concessional funds and technical assistance, reducing financial strain on Indonesian budgets and adding layers of oversight. In parallel, domestic policies should encourage local participation: for example, requiring that major renewable projects include an Indonesian equity component or skill-transfer obligations. These measures ensure that investment flows build domestic capacity and are less susceptible to external shifts.
In conclusion, the synergy between Indonesia and China in legal, cultural, and investment domains holds great promise for advancing sustainable energy. By aligning legal frameworks with strategic goals, Indonesia can maximize Chinese investment in renewables while safeguarding its autonomy and environmental priorities. As experts emphasize, effective legal frameworks are key to accelerating the transition to renewable energy. With careful policy design and international cooperation, Indonesia can turn the challenges of bilateral investment into a robust opportunity for green growth and strengthened diplomatic ties.
References
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