By: Meliana Kede
Indonesia’s economic transformation is entering a new phase. The government under the leadership of President Prabowo Subianto and Vice President Gibran Rakabuming Raka has positioned downstreaming as a key axis of national development.
This strategy is not simply an industrialization agenda, but rather a major step towards transforming the economy from one based on raw material exports to high-value-added production that supports fiscal growth and the nation’s economic independence.
Focusing on downstreaming is one of the four main priorities of the current administration, along with food security, energy, and free nutrition programs. The government views domestic natural resource processing as key to creating added value, expanding job opportunities, and strengthening the economic foundation to be more resilient to global turmoil.
Minister of Energy and Mineral Resources, Bahlil Lahadalia, emphasized that downstreaming and industrialization are the absolute paths Indonesia must take to escape the natural resource curse.
 
In his view, no country with abundant natural resources has achieved developed status without going through planned industrialization. He cautioned that for years Indonesia had been overly reliant on low-value raw material exports, which had not significantly impacted the people’s welfare.
 
Bahlil cited the experience of the nickel sector as an example of the real success of the downstreaming policy. After the cessation of nickel ore exports in 2017, the export value of its derivative products soared from only around US$3.3 billion to more than US$34 billion by 2024.
 
This surge reflects the enormous economic potential that can be achieved when raw materials are processed into high-value products domestically. However, Bahlil also highlighted that the downstreaming process has not been fully well-planned.
 
He assessed that the policy remains reactive and has not been systematically designed with the involvement of a strong management institution. Therefore, the government is currently establishing a special agency under the coordination of the Ministry of Investment and Downstreaming to ensure more solid and sustainable governance.  
In addition to strengthening industrial policy, Bahlil emphasized that the success of downstreaming is highly dependent on efficient and sustainable energy support. The supply of natural gas and other energy resources is a determining factor in the competitiveness of the processing industry. Without stable energy availability, industrialization will not be able to proceed optimally.
 
Meanwhile, Hery Susanto, a member of the Indonesian Ombudsman, views downstreaming as a strategic instrument for strengthening the national economic structure in the long term.
 
In a Focus Group Discussion entitled “Supervision of the National Investment Development and Downstreaming Program in Realizing an Indonesia Free from the Middle Income Trap,” Hery emphasized that downstreaming must be accompanied by efficient investment, transparent governance, and strong oversight.
 
According to Hery, Indonesia’s natural resource potential will be a major driver of economic growth if processed sustainably domestically. The government needs to ensure two major targets: increasing the added value and productivity of the processing industry, and strengthening the integrity of the domestic and global economy.
 
Through this approach, downstreaming is expected to expand quality job opportunities, increase community incomes, and accelerate economic growth in resource-producing regions.
 
Hery also emphasized the importance of maintaining consistent downstreaming policies to attract quality investment. He argued that the government’s limited fiscal space should not be a barrier to continued development, as transformative investment can be a solution for financing sustainable development towards the Golden Indonesia Vision 2045.
 
From a macroeconomic perspective, Coordinating Minister for Economic Affairs Airlangga Hartarto stated that the downstreaming policy has had a positive impact on industrial activity and investment.
 
He explained that key economic indicators such as the consumer confidence index, retail performance, and the Purchasing Managers Index (PMI) show a positive trend. National investment realization reached more than IDR 1,400 trillion, while the manufacturing sector recorded a significant increase in production capacity utilization.
 
Airlangga assessed that the success of downstreaming not only creates added value in the mineral sector but also extends to the agriculture, maritime, and fisheries sectors. The downstreaming programs for coconut, palm oil, and shrimp ponds are concrete examples of how these policies can expand the regional economic base and improve community welfare.The government is also strengthening support through new regulations, including tax incentives and labor-intensive programs, to accelerate the growth of downstream industries in various sectors.
The success of downstreaming is not solely measured by export figures or industrial growth, but also by the country’s ability to create sustainable value chains. Transforming raw materials into high-value products means building a self-sufficient economic ecosystem, strengthening global competitiveness, and reducing dependence on foreign markets.
A targeted downstreaming will be the foundation for Indonesia to escape the middle-income country trap. Supported by strong fiscal policy, productive investment, and transparent industrial governance, this strategy can lead Indonesia to inclusive and equitable economic growth.
Under the leadership of President Prabowo and Vice President Gibran, downstreaming is not only an economic policy but also a symbol of national independence towards a more prosperous future. (*)
Macroeconomic Analyst