By: Rixy Oxidea Rizeta )*
The acceleration of downstreaming project groundbreakings in early 2026 marks a crucial phase in Indonesia’s journey of economic transformation. This step does not merely signify the physical construction of factories and industrial facilities, but represents a fundamental shift in the national development paradigm—from a raw commodity–based economy toward a high value-added industrial structure with global competitiveness.
Downstreaming is now positioned as the main engine of medium-term economic growth, with projections to push growth toward the eight percent range by 2029. This direction shows that the government views downstreaming not as a sectoral policy alone, but as a systemic strategy to increase economic complexity, strengthen industrial self-reliance, and reduce vulnerability to fluctuations in global commodity prices.
This momentum is becoming increasingly tangible through plans to break ground on six strategic downstreaming projects in February 2026, with an investment value of around Rp101 trillion. These projects form the initial phase of a larger portfolio managed by the Danantara Investment Management Agency in cooperation with the Ministry of Investment and Downstreaming.
On a broader scale, throughout 2025 downstreaming investment reached Rp584.1 trillion, or about 30 percent of total national investment realization—strong evidence that economic transformation has moved beyond discourse into concrete implementation.
Minister of Investment and Downstreaming Rosan Roeslani views the acceleration of downstreaming projects as a strategic instrument to enhance Indonesia’s competitiveness in global markets while opening new investment opportunities.
According to him, processing natural resources domestically enables Indonesia to maximize value added, broaden its industrial base, and create an increasingly attractive business climate for both domestic and foreign investors. This orientation positions downstreaming as a bridge between natural resource potential and national industrialization ambitions.
Sectoral diversification has become a key characteristic of the latest phase of downstreaming. Whereas earlier efforts focused heavily on nickel, the scope has now expanded to include bauxite and aluminum, bioavtur, oil refineries, bioethanol, poultry farming, and energy-based waste processing across dozens of sites nationwide.
The bauxite-to-aluminum and smelter grade alumina processing project in Mempawah, West Kalimantan, is projected to strengthen the national metals industry while driving regional economic activity. Meanwhile, bioavtur production in Cilacap and bioethanol projects in several regions underscore the integration of downstreaming with the energy transition agenda.
The development of agriculture- and food-based downstreaming also reflects a more inclusive policy direction. Integrated coconut processing projects in Morowali and the construction of poultry farming facilities in various regions demonstrate efforts to strengthen food security while improving the welfare of farmers and livestock breeders. This approach broadens the meaning of downstreaming—not merely as mineral industrialization, but as value chain strengthening across multiple sectors.
From an economic impact perspective, downstreaming has proven to generate significant multiplier effects. Industrial zones such as the Indonesia Morowali Industrial Park have recorded lower local unemployment rates and increased community incomes.
Nevertheless, environmental challenges and social impacts on communities surrounding industrial areas remain important concerns. Economic transformation through downstreaming requires a careful balance between growth, environmental sustainability, and social equity to ensure that benefits are distributed fairly.
Political commitment to this agenda is clearly reflected in the direct attention of President Prabowo Subianto. Cabinet Secretary Teddy Indra Wijaya explained that the President regularly monitors the progress of strategic downstreaming projects through meetings in Hambalang, including the readiness of several project sites slated for groundbreaking with an investment value of around Rp100 trillion.
The President has also shown particular interest in waste-to-energy projects and coal gasification into dimethyl ether as part of efforts to combine downstreaming with environmental solutions and future energy development.
Minister of State Secretary Prasetyo Hadi added that these downstreaming projects are designed to enhance national competitiveness while opening substantial opportunities for both domestic and global investors.
This approach positions Indonesia as an investment destination that offers not only resource availability, but also policy direction certainty and integrated project scale.
The focus on renewable energy and the utilization of local resources reflects the government’s effort to make downstreaming a foundation for sustainable development—not merely short-term growth acceleration, but a long-term strategy linking industrial transformation, job creation, and regional economic strengthening simultaneously.
Overall, the downstreaming groundbreakings in 2026 can be read as a turning point in Indonesia’s economic transformation. This step underscores the state’s resolve to reshape the economic structure, extend domestic value chains, and shift Indonesia’s position in the global industrial map from a raw material supplier to a value-added producer.
This transition also strengthens the foundation of national industrial self-reliance and reduces dependence on fluctuations in international commodity markets. Implementation challenges, policy consistency, and the management of social and environmental impacts remain significant—particularly in ensuring equitable benefits at the regional level and ecosystem sustainability.
However, with measured policy direction, credible investment governance, and disciplined, sustainable execution, downstreaming has the potential to become a strategic legacy that not only drives economic growth, but also guides Indonesia toward a more resilient, inclusive, and globally competitive long-term economic structure. (*)
