Indonesia’s $220 million Nusantara-2 satellite was destroyed after a Chinese rocket malfunctioned shortly after launch in April 2020, severely harming the archipelago’s attempts to fortify its communication networks. However, it gave one individual an opportunity.

Elon Musk, the proprietor of SpaceX, the most successful rocket launcher in the world, capitalised on the fact that his firm, SpaceX, was unable to unseat state-owned China Great Wall Industry Corp (CGWIC) as Jakarta’s preferred provider of satellite launch services.
The Chinese contractor had used cheap funding, Beijing’s geopolitical clout, and assurances of widespread backing for its space ambitions to pursue Indonesia, the largest economy in Southeast Asia and a major space growth market.

According to two industry insiders in Jakarta who are aware with the situation and a senior government official, the malfunction signalled a shift in Indonesia’s policy away from Chinese space contractors and towards businesses owned by Elon Musk.

Nusantara-2 was the second satellite launch that CGWIC was given by Indonesia, matching the two that SpaceX had launched at the time. China has handled none of SpaceX’s launches since its debacle; the company has launched two Indonesian satellites and is scheduled to launch a third on Tuesday.

According to Reuters, SpaceX defeated Beijing thanks to a mix of less expensive reusable rockets, dependable launches, and Musk’s close friendship with Indonesian President Joko Widodo. In 2022, after the two men met in Texas, SpaceX also received regulatory permission for their Starlink satellite broadband service.

The SpaceX agreements represent a unique opportunity for a Western business to gain traction in Indonesia, where Chinese firms predominate in the telecom industry due to their low prices and simple financing. The achievements followed after Indonesia, citing its reliance on Beijing’s technology, defied American attempts to sever ties with Chinese tech firm Huawei.

Twelve individuals, including American and Indonesian officials, businesspeople, and analysts, detailed the specifics of this change to Reuters; these details had not before been made public. Since they were not permitted to speak with the media, a few of them only spoke under the condition of anonymity.

“SpaceX has never failed in launching our satellites,” said Sri Sanggrama Aradea, head of the satellite infrastructure division at BAKTI, an Indonesian communications ministry agency.

He said it is “hard” for Jakarta to use CGWIC again because of the incident in April 2020.

For this report, SpaceX, CGWIC, and Pasifik Satelit Nusantara—a significant investor in the Nusantara-2 project—did not answer to inquiries.

In response to inquiries from the media, China’s Foreign Ministry stated that “Chinese aerospace enterprises are continuing their space cooperation with Indonesia in various forms.” It didn’t go into detail.

When granting contracts, the government gives preference to capable and efficient technology that serves the needs of Indonesians, according to Ari Dwipayana, a spokesman for the presidential office.

The competition between SpaceX and China provides a glimpse into a broader struggle to control a quickly growing space sector.

According to American consulting firm BryceTech, the entire space industry, including launches, manufacturing, and services, was estimated to be valued $281 billion in 2022, or 73% of the total market.

According to an analysis by Harvard scientist and orbital tracker Jonathan McDowell, China fired a record 67 rockets last year, out of 223 rockets launched worldwide. Most of them were introduced by CGWIC.

China was now just behind the US, which according to the study had 109 launches, 90% of which were carried out by SpaceX.

Beijing and Washington are vying for control of satellite-based communications networks as well.
In the world of satellite internet, SpaceX’s Starlink dominates with over 60% of the 7,500 satellites in orbit. However, China started deploying satellites for the Guowang internet mega-constellation last year, a competitor.

According to U.S. military officials, China seeks to improve its military capabilities and spy on rivals via satellites and space technologies.

China’s Foreign Ministry told Reuters in a statement that the US accusations were baseless and that Washington was exploiting the issues as an excuse to increase its space power.
NASA, in contrast to its Chinese counterpart, mainly uses privately owned rockets from companies like SpaceX, which holds billion-dollar government contracts in the United States.
Nonetheless, according to one current and one former U.S. official working on space policy, the military and government of the United States are worried about their reliance on SpaceX, particularly given Musk’s assertive commercial attitude.

According to the two individuals, whereas traditional American defence companies like Boeing and Lockheed Martin usually confer with the State Department prior to entering into international agreements, SpaceX and Musk had direct dealings with Jakarta.

A Lockheed Martin representative claimed the corporation “works closely with the U.S. Government, our allied nations, and international customers” in response to questions from the media. Requests for response from the State Department were not answered, and Boeing declined to comment.

Speaking on behalf of the Pentagon, Jeff Jurgensen said that the Department of Defense’s “many space industry partnerships have a proven track record of success” but he declined to address specific queries regarding SpaceX.

The CEO of SpaceX has upset certain people in the nation’s capital, according to Nicholas Eftimiades, a former American intelligence officer and specialist on Chinese espionage operations at the Atlantic Council, a Washington-based think tank: “Elon Musk does things his way and some officials don’t like that.”

However, Musk’s transactions defied a long-standing pattern in which Chinese companies outperformed Western companies in Indonesia, a vast archipelago of more than 17,000 islands inhabited by more than 270 million people.

In October, Widodo predicted that Beijing would overtake Singapore as the biggest foreign direct investment in Indonesia in less than two years.

According to Andry Satrio Nugroho, an economist at the Jakarta-based Institute for Development of Economics and Finance think tank, Beijing was the natural partner for satellite launches up to the 2020 event since Chinese companies dominate the internet and 5G industry.

“In many areas, China and Indonesia are closely allied. China’s dominance is hard to overcome.”
Jokowi, the well-known powerful president of Indonesia, paid a visit to a SpaceX facility located in Boca Chica, Texas, in May of 2022.

“Welcome to Starbase,” Musk remarked, grinning and extending a handshake to the president, who was requesting a Tesla investment in the nickel industry in Indonesia.

An Indonesian official with intimate knowledge of the visit said that Widodo’s two hours there consisted of a tour of the manufacturing area after thirty minutes of talks with Musk at an office filled with model rockets.

With the largest reserves of nickel, a crucial component of electric batteries, in the world, the president has long aimed to develop an EV sector in Indonesia. The leader with a limited tenure leaves office in October, but analysts predict Widodo will continue to play a significant role in power dynamics once the candidate he had been secretly backing to succeed him declared victory in the presidential election on February 14.

Last year, Widodo claimed to have wooed Musk with tax incentives, a permit to mine nickel, and an electric vehicle purchase subsidy programme. However, Widodo has made public requests for a Tesla EV and battery manufacturing in Indonesia, but neither has materialised.
Rather, days following the visit, Indonesian officials reportedly started talking about another of Musk’s companies, Starlink, according to a person with firsthand knowledge.

According to the source, Musk requested that Widodo allow Starlink to enter Indonesia during the Texas meeting

The former CEO of Telkomsat, a division of the state-owned telecom company Telkom, Endi Fitri Herlianto, stated that the company was supportive.

Herlianto said that Telkomsat had been requesting regulatory approval for several months in order to utilise Starlink services for cellular backhaul, which involves linking mobile base stations to the company’s network.

The possible effects on domestic telcos of granting a permit worried officials. The strategy remained stagnant until the visit to Boca Chica.

Less than a month after the Texas gathering, Telkom declared that Starlink landing rights had been granted to its subsidiary

According to Indonesia’s ministry of communication, Starlink is not authorised to offer retail internet services to consumers; instead, it can only run a backhaul connection with Telkomsat.
The person with knowledge of conversations in Indonesia stated that Musk “put that ask on the table then and there, so things started,” referring to the meeting in May.

The president and Musk discussed opportunities in Indonesia, according to Dwipayana, the spokesman for Widodo. She also mentioned that officials are still in contact with the billionaire on potential future investments made by his companies, including Tesla.
Telkom did not provide a comment.

The largest satellite in Southeast Asia, the 4.5-ton Satellite of the Republic of Indonesia (SATRIA-1) was launched into orbit by SpaceX’s Falcon 9 rocket in June of last year.
SATRIA-1 project manager Nia Satwika stated that in comparison to other operators, SpaceX provided more launch slot availability and a lower cost.

“They are a game changer,” she remarked, citing SpaceX’s capacity to reuse rocket parts as a critical economic edge over competitors.

(Adapted from Reuters.com)