In April 2020, a Chinese rocket malfunctioned soon after launch, killing Indonesia’s $220 million Nusantara-2 satellite. This made it harder for the island to improve its communication networks. One man, though, saw a chance in it.
The owner of SpaceX, the world’s most famous rocket launcher, Elon Musk, took advantage of losing the bid to beat out China Great Wall Industry Corp. (CGWIC) as Jakarta’s preferred company for sending satellites into space.
Southeast Asia’s biggest economy is Indonesia, a critical space growth market. The Chinese contractor wooed Indonesia with cheap loans, promises of broad backing for its space goals, and the political weight of Beijing.
Reuters talked to a top government official and two business leaders in Jakarta who are familiar with the situation. They said the problem was a turning point for Indonesia to move away from Chinese space operators and toward Musk-owned companies.
Nusantara-2 was the second satellite launch that Indonesia gave to CGWIC. At that time, SpaceX had already done two launches. China hasn’t launched any satellites since its failure. SpaceX has launched two for Indonesia and plans to launch a third on Tuesday.
Reuters found that SpaceX beat Beijing because of its more reliable launches, cheaper rockets that could be used more than once, and Musk’s friendship with Indonesian President Joko Widodo. After meeting in Texas in 2022, the two men became friends. SpaceX also got government approval for its Starlink satellite internet service.
Chinese companies that offer low prices and easy financing control most of Indonesia’s telecoms market, so the SpaceX deals are a rare example of a Western company making progress there. Indonesia had these wins even though the U.S. wanted to back out of its deals with the Chinese tech giant Huawei, saying it needed Beijing’s technology.
Details of this change, told to Reuters by 12 people, including Indonesian and U.S. officials, business people, and experts, have not been made public before. Some spoke on the condition that they were not named because they weren’t allowed to talk to the public.
Sri Sanggrama Aradea, head of the satellite infrastructure section at BAKTI, an office of the Indonesian Ministry of Communications, said, “SpaceX has never failed to launch our satellites.”
He also said that the event in April 2020 makes it “hard” for Jakarta to work with CGWIC again.
SpaceX, CGWIC, and Pasifik Satelit Nusantara, which has a significant stake in the Nusantara-2 project, did not answer our questions for this story.
Reuters asked the Chinese Foreign Ministry about their work with Indonesia in space, and the Ministry said, “Chinese aerospace enterprises are continuing their space cooperation with Indonesia in various forms.” It didn’t say more.
Ari Dwipayana, a spokesman for the presidential office, said that when the government gives out contracts, it prioritizes technology that is useful to Indonesians and works well.
The fight between SpaceX and China is a small part of a bigger fight to control a proliferating space business. According to the U.S. consulting firm BryceTech, the world satellite market, which includes launches, services, and manufacturing, was worth $281 billion in 2022. This was 73% of all space business.

RACE IN SPACE

A report by Harvard scientist and orbital tracker Jonathan McDowell says that China fired a record 67 rockets last year out of a total of 223 around the world. CGWIC fired the vast majority of them.
China was now second only to the U.S. in terms of launches, with 109. The study found that 90% of those launches were by SpaceX.
Washington and Beijing are also fighting over networks of satellites that let people talk to each other.
SpaceX’s Starlink is the leader in satellite internet. It owns about 60% of the 7,500 satellites that orbit the world. On the other hand, China started launching satellites for its rival Guowang internet mega-constellation as late as last year.
Military leaders in the U.S. have said that China wants to spy on its enemies and make its military stronger by using space technology and satellites.
In a statement to Reuters, China’s Foreign Ministry said that the U.S. claims were false and that Washington was using the worries to increase its power in space.
On the other hand, NASA primarily uses privately owned rockets from companies like SpaceX, which has billions of dollars worth of contracts with the U.S. government.
One current and one former U.S. official working on space policy said that the U.S. government and military are worried about how much they depend on SpaceX, especially given Musk’s authoritarian business style.
Officials from both companies said that Musk and SpaceX did business directly with Jakarta. Big U.S. defense companies like Boeing (BA.N…) and Lockheed Martin (LMT.N…) usually check with the State Department first.
A Lockheed Martin representative told Reuters that the company “works closely with the U.S. government, our allied nations, and international customers.” Boeing did not want to say anything, and the State Department did not answer calls for comment.
Jeff Jurgensen, a spokesman for the Pentagon, wouldn’t answer specific questions about SpaceX. Still, he did say that the Pentagon’s “many space industry partnerships have a proven track record of success.”
A former U.S. intelligence officer and expert on Chinese spying at the Atlantic Council, a think tank in Washington, D.C., Nicholas Eftimiades, said that Elon Musk, SpaceX’s CEO, had upset some people in the U.S. capital because he does things his way, which some officials don’t like.
Even so, Musk’s deals broke a long-standing pattern in Indonesia, where more than 270 million people live on more than 17,000 islands, and Western companies have often lost to Chinese ones.
Widodo said in October that Beijing will have more foreign direct investments in Indonesia within two years than any other country.
A think group in Jakarta called the Institute for Development of Economics and Finance expert Andry Satrio Nugroho said that until the 2020 incident, China was the transparent partner for satellite launches. This is because Chinese companies control the internet and 5G networks.
There are many areas where Indonesia and China have a close relationship. It’s hard to stop China from being the leader.

MEETING AT STARBASE

In May 2022, Jokowi, the decisive president of Indonesia, went to a SpaceX plant in Boca Chica, Texas.
“Welcome to Starbase,” Musk said with a smile as he shook hands with the president. The president wanted Tesla to invest in Indonesia’s nickel industry.
A senior Indonesian official there said that during Widodo’s two-hour visit, he talked with Musk for 30 minutes in an office full of small rockets and then showed him around the production area.
The president of Indonesia has long wanted to build an E.V. industry there because the country has the most nickel, an integral part of electric batteries. Even though the leader’s term ends in October, experts say Widodo will still play a significant role in politics even after the candidate he secretly backed to take over as leader won the presidential election on February 14.
Widodo told Reuters last year that he has also offered tax breaks, permission to mine nickel, and a plan to subsidize the purchase of electric vehicles (E.V.s) to get Musk to come to Nevada. But the Tesla EV or battery plant that Widodo has openly asked for has not come to fruition.
Someone who knew about it said that Indonesian officials started talking about another of Musk’s businesses, Starlink, a few days after the trip.
A source said that Musk asked Widodo to let Starlink into Indonesia at the meeting in Texas.
Former CEO Endi Fitri Herlianto of Telkomsat, a branch of the state-owned telecoms company Telkom, told Reuters that the company was in favor.
Herlianto said that the company had been trying for months to get permission from the government so that Telkomsat could use Starlink’s services for cellular backhaul, which means connecting mobile base stations to its network.
Officials were worried about what would happen to local phone companies if the permit was given. The plan didn’t move forward until the trip to Boca Chica.

“GAME CHANGER”

Not long after the meeting in Texas, Telkom said that one of its subsidiaries had been given the right to land Starlink satellites.
The communication ministry of Indonesia told Reuters that Starlink can only run a backhaul service with Telkomsat and can’t sell internet services to consumers.
A person who knows about the talks in Indonesia said that Musk “put that question on the table right then and there,” which refers to the meeting in May.
Dwipayana, Widodo’s spokesman, revealed that Musk and the president talked about business possibilities in Indonesia. He also said officials are still talking to the billionaire about possible future investments by his companies, such as Tesla.
Telkom did not answer when asked for a response.
This past June, SpaceX’s Falcon 9 rocket sent Southeast Asia’s giant satellite, the 4.5-ton Satellite of the Republic of Indonesia (SATRIA-1), into space.
Nia Satwika, who is in charge of the SATRIA-1 project, said that SpaceX had more launch times available and lower prices than other companies.
“They are a game changer,” she said, referring to SpaceX’s ability to recover rocket parts, which gives them a significant cost edge over their competitors.