How a Chinese Rocket Failure Boosted Elon Musk's SpaceX in Indonesia

ELON MUSK - JAKARTA - When a Chinese rocket malfunctioned shortly after launch in April 2020, destroying Indonesia's $220 million Nusantara-2 satellite, it was a blow to the archipelago's efforts to strengthen its communication networks. But it presented an opportunity for one man.

Elon Musk - the owner of SpaceX, the world's most successful rocket launcher – seized on the failure to prevail over state-owned China Great Wall Industry Corp (CGWIC) as Jakarta's company of choice for putting satellites into space.

The Chinese contractor had courted Indonesia - Southeast Asia's largest economy and a key space growth market - with cheap financing, promises of broad support for its space ambitions, and the geopolitical heft of Beijing.

A senior government official and two industry officials in Jakarta who are familiar with the matter told Reuters the malfunction marked a turning point for Indonesia to move away from Chinese space contractors in favor of companies owned by Musk.

Nusantara-2 was the second satellite launch awarded by Indonesia to CGWIC, matching the two carried out by SpaceX at that time. Since its failure, SpaceX has launched two Indonesian satellites, with a third set for Tuesday; China has handled none.

SpaceX edged out Beijing through launch reliability, cheaper reusable rockets, and the personal relationship Musk nurtured with Indonesian President Joko Widodo, Reuters found. Following a meeting between the two men in Texas in 2022, SpaceX also won regulatory approval for its Starlink satellite internet service.

The SpaceX deals mark a rare instance of a Western company making inroads in Indonesia, whose telecommunications sector is dominated by Chinese companies that offer low costs and easy financing. The successes came after Indonesia resisted U.S. pressure to abandon its deals with Chinese tech giant Huawei, citing its dependence on Beijing's technology.

Details of this shift, which were described to Reuters by a dozen people, including Indonesian and U.S. officials, industry players, and analysts, have not previously been reported. Some of them spoke on condition of anonymity because they weren't authorized to talk to the media.

"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.

The April 2020 incident makes it "hard" for Jakarta to turn to CGWIC again, he added.

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

In response to Reuters ' questions, China's Foreign Ministry said, "Chinese aerospace enterprises are continuing their space cooperation with Indonesia in various forms." It did not elaborate.

Presidential office spokesperson Ari Dwipayana said the government prioritizes efficient and capable technology that meets the needs of Indonesians when awarding contracts.

The tussle between SpaceX and China offers a window into a much larger battle to dominate a rapidly expanding space industry.

The global satellite market - including manufacturing, services, and launches - was worth $281 billion in 2022, or 73% of all space business, according to U.S. consultancy BryceTech.