By: Arisya Ramadhani
Indonesia’s current economic transformation is being directed toward strengthening a more integrated industrial structure through the optimization of domestic natural resources. The government is gradually shifting its paradigm from being a raw material exporter to becoming a country that prioritizes value-added processing through systematic downstreaming policies. The primary instrument supporting this agenda is Danantara, Indonesia’s sovereign investment management agency, which serves as a strategic institution to manage capital while mobilizing priority industrial sectors. Danantara’s presence is expected to serve as a bridge for sustainable global investment flows into the national economic ecosystem.
The significance of Danantara’s role was clearly demonstrated during the President’s recent state visit to the United States. Before business leaders at the forum hosted by the US Chamber of Commerce in Washington, D.C., Indonesia was reaffirmed as a competitive, stable, and promising investment destination. This commitment was strengthened by the signing of the Agreement on Reciprocal Trade (ART), which provides greater legal certainty and broader market access for both countries. The agreement is not merely a diplomatic document, but a strong signal that Indonesia is ready to integrate its supply chains into the global economy through equal and mutually beneficial partnerships.
The Minister of Investment and Downstreaming, who also serves as CEO of Danantara, Rosan P. Roeslani, explained that the ART agreement opens doors for various strategic transactions, ranging from aviation to energy security. One key point includes plans to purchase Boeing aircraft units and expand energy import cooperation projected to reach significant annual figures. In this context, Danantara ensures that incoming investments go beyond statistical figures and genuinely generate added value for the domestic economy through technology transfer and the strengthening of industrial infrastructure.
The government’s main focus is now to replicate the success of nickel downstreaming in other strategic commodities, particularly bauxite. The Minister of Energy and Mineral Resources, Bahlil Lahadalia, emphasized in an economic forum that the nickel ore export ban introduced in 2020 successfully increased the export value of derivative products by up to tenfold within a short period. This success serves as a blueprint for bauxite management, considering Indonesia possesses abundant global reserves. With resource potential reaching billions of tons, developing a robust national aluminum industry has become imperative for achieving economic sovereignty.
Through Danantara and MIND ID, the government has prepared a comprehensive roadmap to integrate the bauxite–alumina–aluminum supply chain. The construction of the Smelter Grade Alumina Refinery (SGAR) facility in Mempawah, West Kalimantan, stands as concrete proof of this commitment. The project is designed to reduce dependence on alumina imports and strengthen the domestic aluminum production base. Once all phases are operational, Indonesia will have the capacity to independently meet the raw material needs of its national manufacturing industry. MIND ID President Director Maroef Sjamsoeddin stressed that such projects represent tangible contributions toward reinforcing national sovereignty in the mineral sector.
The economic impact of downstreaming is substantial. Mathematically, processing bauxite ore into aluminum can increase its value by up to seventy times. This surge in value will not only boost Gross Domestic Product (GDP), but also significantly enhance state revenue and foreign exchange reserves. Furthermore, the national manufacturing industry will gain greater supply certainty at more competitive prices, ultimately generating broad employment opportunities and fostering more equitable economic growth.
However, the government’s vision extends beyond conventional minerals. Danantara has begun expanding into more advanced sectors, particularly the development of rare earth elements (REE). Through strategic collaboration with international partners such as New Energy Metals Holdings Ltd, Indonesia is evaluating global supply chain potential involving niobium resources and REE. These materials are critical components for future technologies, ranging from electric vehicles and renewable energy systems to advanced defense industries.
The Head of the Mineral Industry Agency, Brian Yuliarto, stated that such partnerships reflect growing global confidence in Indonesia’s industrial capacity. By positioning Danantara as a financing and investment participation platform, Indonesia aims to establish a competitive downstream processing hub in the global critical minerals market. This aligns with the President’s mission to position Danantara as a driving force in initiating new downstream projects each year, including innovative initiatives such as waste-to-energy processing.
The President has consistently assured global investors that Indonesia’s economic fundamentals remain strong, characterized by stable growth, controlled inflation, and sound fiscal discipline. By integrating natural resource strength, political stability, and a clear industrialization vision, Indonesia is positioning itself as a major player in global supply chains. Downstreaming policies, fully supported by Danantara, will ensure that the nation’s natural wealth is managed effectively for the prosperity of its people and the advancement of future civilization.
Researcher at the Center for Strategic Economic and Public Policy Studies
