By: Safira Tri Ningsih)*
In order to encourage economic equality throughout the archipelago, President Prabowo Subianto has established a downstreaming strategy as one of the pillars of national economic policy.
Based on the vision to utilize natural resource potential optimally, President Prabowo wants to present equitable distribution, especially by reducing dependence on raw material exports and creating added value domestically. Downstreaming aims to improve people’s quality of life, create jobs, and strengthen Indonesia’s economic resilience.
The Ministry of Investment and Downstreaming and the Investment Coordinating Board (BKPM) emphasized the importance of downstreaming to achieve the government’s targeted economic growth of 8% in the next five years.
Currently, the downstreaming roadmap has been refined for 28 priority commodities to optimize Indonesia’s natural potential, including nickel, copper, bauxite, palm oil, and various fishery and forestry products.
This improvement targets acceleration and optimization of financial, technical, and legal aspects so that downstream sector investment becomes more attractive to large investors and regional business actors.
In the mineral sector, for example, the government has stopped nickel exports since 2020, which has had an impact on increasing the export value from only US$3 billion to more than US$30 billion after being processed domestically.
By relying on downstreaming, the investment value of the sector is projected to reach US$127.90 billion in 2040, and contribute to gross domestic product (GDP) of up to US$43.20 billion. The effects of downstreaming are expected to create more than 357,000 new jobs, have a significant impact on the local economy and build national independence.
President Prabowo also drafted a policy that encourages the involvement of regional entrepreneurs and Micro, Small, and Medium Enterprises (MSMEs) in downstream projects. In the Regulation of the Minister of Investment Number 1 of 2022, investors are required to cooperate with national entrepreneurs in the regions.
In this way, local entrepreneurs are expected to become major players in their own country, MSMEs can move up a class, and economic distribution is more even. Downstreaming not only increases regional income but also becomes a strategic step towards an Indonesia-centric vision that prioritizes economic justice for all people.
Member of the Indonesian House of Representatives, Bambang Soesatyo (Bamsoet), also voiced his support for the economic transformation initiated by President Prabowo. Bamsoet assessed that the downstreaming policy is the answer to global challenges in the era of industry 4.0 and the advancement of artificial intelligence (AI) technology.
The transformation changes the mindset in managing natural resources to produce products with high added value. The natural resource downstreaming agenda is a valuable legacy for future generations and will continue to develop according to the needs and dynamics of the times.
According to Bamsoet, downstreaming requires a shift in work patterns and coordination between institutions in order to be able to respond to changes quickly and appropriately. The main challenges of downstreaming include expensive capital goods and dependence on imports.
Bamsoet believes that by increasing research and development (R&D) activities, Indonesia is able to produce its own capital goods and expand the added value of commodities. Research institutions such as the National Research and Innovation Agency (BRIN) are expected to be able to encourage innovation in this field, such as optimizing environmentally friendly production processes and managing industrial waste.
On the other hand, President Director of PT Bank Rakyat Indonesia (Persero) Tbk., Sunarso, revealed that the downstream strategy implemented by President Prabowo is in line with BRI’s vision in driving national economic growth. Downstreaming is one of the fundamental efforts to increase labor absorption and better income distribution.
The development of agricultural-based downstream products such as palm oil, for example, will have a major impact on increasing employment opportunities and equalizing income distribution. BRI views downstreaming as a promising business opportunity, considering that every increase in economic activity in the downstream sector will contribute to GDP growth.
Sunarso added that in achieving economic growth above 6%, the availability and quality of human resources are the main factors. Therefore, downstream efforts must go hand in hand with improving the quality of human resources through food self-sufficiency and good nutritional access. With adequate nutrition, the community is expected to be able to obtain better education and become a competent workforce to support the production process in the downstream sector.
Downstreaming is a bridge for Indonesia to avoid the middle income trap . By processing natural resources domestically, the government can achieve sustainable economic growth and reduce economic disparities between regions.
The policy does not only focus on increasing GDP alone, but also on distributing benefits to all Indonesian people. President Prabowo wants to ensure that every region and every level of society benefits from downstreaming, so that economic justice can be created in a real and even manner.
With concrete steps and collaboration between the government, private sector, and society, the vision of economic equality through downstreaming will be closer to reality. President Prabowo hopes that through downstreaming, Indonesia will be able to realize an independent, strong, and inclusive economy, bringing prosperity to all its people.
)* The author is a contributor to Daris Pustaka