Jakarta:

In April 2020, a Chinese rocket malfunctioned shortly after launch, destroying Indonesia’s $220 million Nusantara-2 satellite, a blow to the archipelago’s efforts to strengthen communications networks. But this presents an opportunity for one man.

Elon Musk, owner of SpaceX, the world’s most successful rocket launch company, has jumped at the chance to beat state-owned China Great Wall Industry Corporation (CGWIC) to become Jakarta’s choice to send satellites into space .

The Chinese contractor has lured Indonesia, Southeast Asia’s largest economy and a key space growth market, with cheap financing, promises of broad support for its space ambitions and Beijing’s geopolitical clout.

A senior government official in Jakarta familiar with the matter and two industry officials told Reuters the outage marked a turning point in Indonesia’s shift away from Chinese space contractors and toward supporting Musk’s companies.

Nusantara-2 is the second satellite launch mission Indonesia has awarded to Great Wall Industries, matching the two satellite launch missions conducted by SpaceX at the time. Since the failure, SpaceX has launched two Indonesian satellites, with a third due to launch on Tuesday. China has not dealt with it.

Reuters found that SpaceX beat Beijing to the punch with launch reliability, cheaper reusable rockets and Musk’s personal relationship with Indonesian President Joko Widodo. SpaceX also received regulatory approval for its Starlink satellite internet service after the two met in Texas in 2022.

The SpaceX deal marks a rare entry by a Western company into Indonesia, whose telecoms industry is dominated by Chinese companies with low costs and easy financing. The successes come after Indonesia resisted U.S. pressure and abandoned a deal with Chinese tech giant Huawei, citing its reliance on Beijing’s technology.

More than a dozen people, including Indonesian and U.S. officials, industry players and analysts, described details of the shift to Reuters but have not previously reported it. Some of them requested anonymity because they were not authorized to speak to the media.

“SpaceX has never failed in launching satellites,” said Sri Sanggrama Aradea, head of the satellite infrastructure department of Indonesia’s communications ministry agency BAKTI.

He added that the events of April 2020 made it “difficult” for Jakarta to turn to CGWIC again.

Pasifik Satelit Nusantara, a major shareholder in SpaceX, CGWIC and the Nusantara-2 project, did not respond to questions for this article.

“Chinese aerospace enterprises are continuing to carry out various forms of aerospace cooperation with Indonesia,” China’s Foreign Ministry said in response to a question from Reuters. It did not elaborate.

Presidential Office spokesman Ari Dwipayana said the government prioritizes efficient, capable technologies that meet the needs of Indonesians when awarding contracts.

The battle between SpaceX and China provides a window into a larger battle for dominance in the rapidly expanding space industry.

According to US consulting firm BryceTech, the global satellite market (including manufacturing, services and launch) will be worth US$281 billion by 2022, accounting for 73% of all aerospace business.

space race

A report by Harvard professor and orbit tracker Jonathan McDowell said that 223 rockets were launched globally last year, with China setting a record of 67 launches. The vast majority are initiated by Great Wall Industrial Group.

That puts China second only to the United States, which conducted 109 launches, 90% of which were by SpaceX, the report found.

Washington and Beijing are also competing over satellite communications networks.

SpaceX’s Starlink dominates the satellite internet space with about 60% of the approximately 7,500 satellites orbiting Earth. But last year, China began launching satellites for its rival State Grid broadband mega-constellation.

U.S. military officials say China hopes to use satellite and space technology to spy on rivals and bolster its military capabilities.

China’s Foreign Ministry said in a statement to Reuters that the U.S. accusations were defamatory and that Washington was using the concerns as an excuse to expand its influence in space.

Unlike its Chinese counterparts, NASA relies primarily on private rockets from companies like SpaceX, which has billions of dollars in U.S. government contracts.

But the U.S. government and military are concerned about their reliance on SpaceX, especially given Musk’s hard-line business style, according to a current and former U.S. official who works on space policy.

Traditional U.S. defense contractors such as Boeing and Lockheed Martin typically consult the State Department before making overseas deals, while Musk and SpaceX deal directly with Jakarta, two officials said.

In response to questions from Reuters, a Lockheed Martin spokesman said the company “works closely with the U.S. government, our allies and international customers.” Boeing declined to comment, and the State Department did not respond to a request for comment.

Pentagon spokesman Jeff Jurgensen declined to answer specific questions about SpaceX but said the Defense Department’s “many aerospace industry partnerships have a track record of success.”

Nicholas Eftimiades, a former U.S. intelligence official and an expert on Chinese espionage at the Atlantic Council, a Washington think tank, said SpaceX’s CEO had angered some in the U.S. capital: “Elon Musk follows Do things your own way, and some officials don’t. “Don’t like that.”

Still, Musk’s deal reverses a long-term trend of Western companies losing ground to Chinese companies in Indonesia. Indonesia is a vast archipelago of more than 17,000 islands and a population of over 270 million people.

Widodo said in October that Beijing would overtake Singapore as Indonesia’s largest foreign direct investor within two years.

Andry Satrio Nugroho, an economist at the Institute of Economic and Financial Development in Jakarta, said Chinese companies dominate the internet and 5G markets, so before the events of 2020, Beijing has been an obvious partner for satellite launches.

“Indonesia has close relations with China in many areas. It is difficult to break China’s dominance.”

interstellar base meeting

In May 2022, Indonesian President Joko Widodo visited the SpaceX factory in Boca Chica, Texas.

“Welcome to Starbase,” Musk said, smiling as he shook hands with the president, who was seeking Tesla’s investment in Indonesia’s nickel industry.

Widodo’s two-hour visit included a 30-minute meeting with Musk in an office filled with miniature rockets, followed by a tour of production areas, according to an Indonesian official with direct knowledge of the matter.

The president has long sought to build an electric car industry in Indonesia, which has the world’s largest reserves of nickel, a key element in batteries. The term-limited leader will step down in October, but experts say Widodo will remain a key power broker after the successor he tacitly supports wins the February 14 presidential election.

Widodo told Reuters last year that he had also offered tax breaks, nickel mining incentives and a subsidy program for electric vehicle purchases in an effort to lure Musk. But Widodo’s public demands to build a Tesla electric vehicle or battery factory in Indonesia have yet to materialize.

Instead, days after the trip, Indonesian officials began discussing another of Musk’s businesses: Starlink, according to a person with direct knowledge of the trip.

Sources said that during the meeting in Texas, Musk asked Widodo to allow Starlink to enter Indonesia.

Endi Fitri Herlianto, former chief executive of Telkomsat, a subsidiary of state-owned telecoms firm Telkom, told Reuters the company was supportive.

Herlianto said the telco had been seeking regulatory approval for months so that Telkomsat could use Starlink services for cellular backhaul, or to connect mobile towers to its network.

Officials are concerned about the potential impact on domestic telecommunications companies if the license is granted. No progress was made on the plan until Boca Chica’s visit.

“Game Changer”

Less than a month after the Texas meeting, Telkom announced that its subsidiary had secured Starlink landing rights.

Indonesia’s communications ministry told Reuters Starlink is only allowed to operate backhaul services with Telkomsat and does not have the authority to retail consumer internet services.

A source with knowledge of the discussions in Indonesia said Musk “put the issue on the table right then and there and things started.” He was referring to the May meeting.

Widodo spokesman Devi Payana confirmed that Musk and the president discussed opportunities in Indonesia, adding that officials were still in talks with the billionaire about future investments in his businesses, including Tesla. communicate.

Telkom did not respond to a request for comment.

In June last year, SpaceX’s Falcon 9 rocket launched Southeast Asia’s largest satellite, the 4.5-ton Satellite of the Republic of Indonesia (SATRIA-1) into orbit.

Nia Satwika, SATRIA-1 project manager, said SpaceX has lower costs and higher launch slot availability compared to other operators.

“They are a game changer,” she said, referring to SpaceX’s ability to reuse parts of its rockets — a key cost advantage over rivals.

(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)