By: Gendhis Sathiti *)
 
The process of processing natural resources from raw materials into high-value commodities is entering an aggressive phase. Under the leadership of President Prabowo Subianto and Vice President Gibran Rakabuming Raka, downstream processing has become a major strategy to demonstrate national economic competitiveness amidst intense global competition.
 
The government has placed downstream processing as one of its main priorities for economic development, in line with three other focuses: food security, energy, and the free nutrition program. This strategy not only continues the long-term policy of the previous administration but also expands the scope of commodities to include the agriculture, fisheries, and renewable energy sectors. The goal is clearly to create added value domestically and affirm Indonesia’s position as a new industrial power in Asia.
 
The biggest transformation is evident in the nickel sector. Downstream processing of this metal has transformed the face of the national industry since the ban on raw ore exports was implemented. The Minister of Energy and Mineral Resources, Bahlil Lahadalia, explained that the value of nickel exports in 2017 was only around US$3.3 billion.
After raw material exports were stopped and a domestic processing industry was established, the export value surged to more than US$35 billion per year. This increase demonstrates the enormous economic potential that can be achieved when raw materials are processed into high-value derivative products, such as electric vehicle batteries and stainless steel.
Bahlil assessed that downstreaming has created a broad multiplier effect. The construction of new smelters and processing facilities has created millions of jobs, increased tax revenues, and strengthened regional revenues.
He stated that if all downstreaming projects are implemented, the investment required will reach US$618 billion, with the potential to create up to 3 million new jobs. The government has also approved the first phase of downstreaming, which includes 21 priority projects in various sectors, from mining, oil and gas, to agriculture and maritime affairs, with a total investment of around US$40 billion.
 
Besides nickel, the palm oil sector is the next focus. The government is accelerating the downstreaming of palm oil so that it is no longer solely dependent on crude oil exports, but rather develops derivative products such as biofuel, margarine, and oleochemicals. This policy not only expands added value but also strengthens the transition to environmentally friendly, low-carbon energy.
 
Deputy Minister of Investment and Downstreaming, Todotua Pasaribu, assessed that the downstreaming of minerals and natural resources is not merely an economic strategy, but a strategic step towards building a sustainable industrial ecosystem.
 
He explained that downstreaming creates a new value chain connecting the mining, energy, and manufacturing sectors. With efficient licensing and a conducive investment climate, Indonesia’s industrial competitiveness is believed to increase significantly in the global market.
 
Todotua emphasized that the development of downstreaming also paves the way for Indonesia to lead the low-carbon global supply chain. Natural resource management is aimed at promoting sustainable prosperity and maintaining environmental balance.
 
President Prabowo Subianto assessed that the contribution of downstreaming to national economic performance is increasingly evident. In his speech before parliament, he stated that economic growth in the second quarter of 2025 will reach 5.12 percent annually, up from 4.87 percent in the previous quarter. This growth was driven by a 10.67 percent increase in exports, with the downstream sector being a key driver of increased added value.
 
The government also recorded a decline in the unemployment rate to 4.76 percent and a decline in the poverty rate to a historic low of 8.47 percent. These figures demonstrate the tangible impact of downstreaming on improving public welfare. By expanding the industrial base and encouraging domestic processing of natural resources, the government is striving to create an inclusive and highly competitive economy.
 
Bahlil Lahadalia emphasized that downstreaming requires cross-sector collaboration and strong political courage. He acknowledged that the policy of restricting raw material exports had drawn protests from industry players, but the measure proved to be the right one.
 
According to him, it’s time for Indonesia to stop relying on raw material exports and become an industrial nation producing finished products. On numerous occasions, he has emphasized that the biggest challenge is not the availability of resources, but rather the ability to manage them independently.
 
Meanwhile, the government continues to expand downstream processing to more than 28 other leading commodities, such as tin, bauxite, copper, seaweed, and nutmeg. These efforts are designed to createDiversifying the economy and strengthening Indonesia’s position in the global supply chain.
Through the development of supporting infrastructure in various regions, downstreaming is expected to create equitable economic growth and open up access to jobs outside Java.
The Prabowo-Gibran administration positions downstreaming as the foundation for building a resilient and sovereign economy. This strategy aims not only to increase added value but also to strengthen the competitiveness of national industry amidst rapid global economic change.
From nickel to palm oil, downstreaming proves that Indonesia’s natural resource wealth is not merely potential, but a real source of strength for national economic transformation.
With strong governance, productive investment, and environmental sustainability, Indonesia is asserting itself as a country capable of transforming its natural wealth into a world-class industrial powerhouse. (*)
 
*) environmental observer
