By: Yoga Pranata)*
The government’s move to reinforce downstream industrialization once again demonstrates an economic policy direction that places value-added creation as a top priority, marked by the commencement of several strategic Danantara projects expected to transform Indonesia’s industrial structure from one reliant on raw commodities into a producer of high-value, globally competitive products.
The Chairman of the Kamar Dagang dan Industri Indonesia (KADIN), Anindya Bakrie, assessed that the groundbreaking of six initial downstream projects—out of a total of 18 under Danantara—sends a strong signal that Indonesia is serious about accelerating economic transformation. According to him, downstreaming is not merely a policy slogan but a tangible instrument to create jobs, attract investment, and strengthen Indonesia’s position in international trade. By processing natural resources domestically, raw materials are no longer exported in their unprocessed form but transformed into high-value products that generate multiplied benefits for the national economy.
Anindya Bakrie emphasized that Indonesia’s exports have long been overly dependent on primary commodities such as crude palm oil and coal. This pattern limits the economic value captured domestically. Through downstreaming, Indonesia is encouraged to export more complex derivative products, ensuring that profits are not solely enjoyed by foreign markets but also flow into domestic industries, the workforce, and national businesses. He views the shift in export structure as inevitable if Indonesia is to avoid being trapped as merely a supplier of raw materials.
Furthermore, Anindya highlighted technological mastery as a foundation for successful downstreaming. He cited the potential of processing silica into silicon wafers required by the semiconductor industry. If Indonesia can control such production chains, it has the opportunity to move up the global value chain rather than remain at its lower tiers. In his view, downstreaming must go hand in hand with technology transfer and human resource capacity building to ensure sustainable benefits.
Optimism toward Danantara’s downstream projects is reflected in the diverse initiatives currently underway. A bauxite-to-alumina and aluminum project in Mempawah, West Kalimantan, involving substantial investment, is projected to strengthen the national metals industry while supporting expanded production capacity in Kuala Tanjung, North Sumatra. In the renewable energy sector, a bioethanol project in Glenmore, Banyuwangi, East Java, along with a biorefinery project in Cilacap, Central Java, signals the government’s commitment to promoting energy derived from domestic resources. Meanwhile, the construction of integrated poultry facilities in various regions and salt factories using mechanical vapor recompression technology demonstrates that downstreaming is not limited to heavy industry but also targets strategic food sectors.
President Prabowo Subianto has repeatedly emphasized that downstreaming constitutes a key pillar of future economic development. During a business forum with the US Chamber of Commerce in Washington, D.C., he reaffirmed Indonesia’s commitment to deepening economic cooperation with the United States through trade agreements that provide certainty for investors. He invited American businesses to establish long-term partnerships and view Indonesia not merely as a market but as a promising production base. In this context, Danantara is positioned as the primary engine driving downstream projects and serving as a strategic partner for global investors.
President Prabowo noted that Indonesia’s economic fundamentals remain on a solid trajectory. Consistent economic growth above five percent, controlled inflation, and maintained fiscal discipline form a crucial foundation for attracting foreign investment. High foreign direct investment realization reflects business confidence in political stability and the government’s policy direction. Nevertheless, he acknowledged ongoing challenges such as corruption, smuggling, and illegal economic activities that must be firmly addressed to ensure a healthy business climate.
From the food sector perspective, Minister of Agriculture Andi Amran Sulaiman stressed that the poultry downstreaming initiative led by Danantara has the strategic objective of stabilizing prices. According to him, fluctuations in chicken and egg prices often stem from upstream issues, including feed, vaccines, and chick supply. By involving state-owned enterprises directly in upstream activities, the government aims to ensure sustainable supply and protect small-scale farmers. He considered this step essential to fairly balance the interests of producers and consumers.
Over the past year, the government has recorded various achievements that strengthen the foundation of downstreaming policies, ranging from food inflation control and increased investment realization to strengthened energy and food security. Successfully maintaining economic stability amid global uncertainty demonstrates that the chosen policy direction is on the right track and provides space for implementing strategic projects such as Danantara.
Ultimately, downstreaming reinforced through Danantara is not merely about building factories or expanding production capacity, but about the courage to transform the paradigm of economic development. Through collaboration between the government, the private sector, and investors, Indonesia has a significant opportunity to escape the trap of a raw commodity-based economy and advance toward high value-added industrialization. Challenges certainly remain, but with policy consistency and robust oversight, downstreaming can pave the way toward economic independence and more equitable prosperity for all Indonesians.
)* Analyst of Indonesia’s Economic Transformation