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Call it a taper tantrum, times 10. Developing nations are reeling from the double whammy of Federal Reserve interest-rate hikes and China’s economic slowdown. They are burning through foreign reserves at the fastest pace since 2008 to defend their currencies and cover higher import bills for food and fuel. Foreign investors are heading for the exits, while frontier economies such as Sri Lanka and Bangladesh have sought bailouts from the International Monetary Fund. The picture is not pretty. Amid the chaos is a surprise winner. Indonesia, singled out as a one of the ‘fragile five’ less than a decade ago for its vulnerable currency and reliance on hot foreign money, has been a haven of relative calm.

The rupiah, down only 3.8%, is the third best-performing Asian currency this year. It’s all the more remarkable considering Bank Indonesia has resisted following the Fed and only began raising interest rates this week, by a modest 25 basis points.

Its stock market is another winner. The iShares MSCI Indonesia ETF is up 5.6% this year, beating the S&P 500 Index’s 13.1% drop. As a result, even though foreigners have been selling holdings of government bonds, robust equity demand has helped stabilize Indonesia’s portfolio flows.

When global markets get turbulent, investors flee countries with the so-called twin deficits—of the current account and fiscal balance. Indonesia has been fairly immune, because it’s making progress on both fronts.

President Joko Widodo should send Russia’s Vladimir Putin a thank you card. The conflict in Ukraine has pushed up prices of palm oil and coal, which Indonesia exports. These two commodities alone improved the country’s current account by 2.4% of gross domestic product (GDP) since 2019, with one-third coming from palm oil and the rest from elevated coal prices, according to HSBC Holdings Plc. Indonesia now has a solid current-account surplus for the first time since 2011.

Like everywhere else, in the last two years, Jakarta spent plenty to counter pandemic-induced slowdowns. But Jokowi, as the president is known, vowed to bring his budget back in order. Earlier this week, the government pledged to return its 2023 fiscal deficit to the goal of 3% of GDP.

Jakarta will reduce its fuel subsidies, which amount to as much as 2.7% of GDP this year. The price of the most-consumed gasoline has been fixed at 7,650 rupiah ($0.52) per litre since 2019, or about 40% below the current market price, according to Maybank economist Lee Ju Ye. But Indonesia wants to be seen as far more than just a source of commodities—at least this is not Jokowi’s preferred narrative. After all, one can point to Chile, the Saudi Arabia of lithium, a key input for electric-vehicle batteries. Chile somehow has not managed to capture the epic switch to electric vehicles (EVs), and is benefiting from IMF help.

Jokowi is keen to build up an entire EV manufacturing industry at home, rather than being a mere exporter of nickel, another essential input for EV batteries. In a recent interview with Bloomberg News, he confirmed that Indonesia may impose an export tax on nickel this year as an incentive to entice global manufacturers to open EV factories there. Jokowi even wants Tesla to make cars locally.

So far, plenty of manufacturers are responding. In April, South Korea’s LG Energy Solution Ltd, the world’s second-largest battery maker, signed a $9 billion deal to build a mines-to-manufacturing supply chain. Meanwhile, China’s Contemporary Amperex Technology Company, the world’s largest, is building production lines in a near-$6 billion deal.

Jakarta has cut off commodity supplies in the past so it’s smart for foreign companies to place factories close to the resources and heed policy priorities. After all, Indonesia has more than 20% of the world’s nickel reserves.

None of the EV manufacturers’ pledges is reflected in economic statistics yet; building factories takes time. But they nonetheless stoke asset managers’ confidence that Indonesia will see robust foreign direct investment (FDI), which are more stable than portfolio flows, and that perhaps manufacturing, whose 20% share of the Indonesian economic pie has barely budged over the past decade, could give a boost to its commodity-fuelled economic growth.

The Russia-Ukraine conflict has prompted a shift in global economic power to resource-rich countries. However, having prized metal reserves is not enough. The government needs to know better than to squander its riches, and know how to leverage its power to move up the value chain. Jokowi has done very well for Indonesia, even before his vision turns into reality.

Shuli Ren is a Bloomberg Opinion columnist covering Asian markets.

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