By: Adnan Ramdani)
Downstreaming has become one of the government’s strategic agendas to achieve inclusive and equitable economic growth across all regions. This policy is no longer viewed merely as an effort to increase the added value of commodities, but also as a driving force for the structural transformation long needed by the national economy. The government recognizes that dependence on raw material exports creates long-term vulnerabilities, especially as global market dynamics shift rapidly. Therefore, through well-planned and sustainable downstreaming programs, the government is committed to strengthening regional economic foundations so that each area can grow in accordance with its own characteristics and local strengths.
One of the key aspects of the downstreaming policy is the effort to create new jobs in the regions. The government understands that economic development is meaningless without improvements in public income. The presence of processing industries near commodity production centers has proven effective in absorbing a significant number of workers, while reducing community dependence on primary sector activities alone. When commodities such as nickel, bauxite, palm oil, and agricultural products are processed directly in their regions of origin, the resulting economic impact becomes far greater.
The Director of Mineral and Coal Downstreaming at the Ministry of Investment and Downstreaming/Investment Coordinating Board (BKPM), Rizwan Aryadi Ramdhan, stated that over the past five years, nickel downstreaming has generated positive outcomes for regional economies, especially in Central Sulawesi, Southeast Sulawesi, and North Maluku. Economic growth in these regions is reflected in declining unemployment rates. The rapid expansion of nickel downstreaming companies has also led to a fourfold increase in the export value of nickel derivative products over the last five years compared to 2019, raising Indonesia’s share of global nickel derivative exports from only 2.77% in 2019 to 10.9% in 2023.
The government continues to strengthen infrastructure development as a key foundation for successful downstreaming. Roads, ports, electricity networks, and clean water facilities are being prepared to ensure that processing industries can operate efficiently. These infrastructure investments not only facilitate production activities but also enhance mobility of goods and people across regions. As a result, economic growth is no longer concentrated in major cities but is spreading to areas with strong commodity potential.
At the same time, the government recognizes that downstreaming should not focus solely on large investments and medium-to-large-scale industries. Involving micro, small, and medium enterprises (MSMEs) is essential so that downstreaming benefits can be felt at the grassroots level. Business mentoring programs, product quality improvement training, and expanded access to financing are all part of a broader strategy to empower the local economy. MSMEs are being integrated into downstream industry supply chains, whether as suppliers of supporting raw materials, service providers, or processors of secondary products derived from local commodities. Through this approach, downstreaming not only strengthens the national industrial structure but also fosters economic self-reliance within local communities.
Meanwhile, Coordinating Minister for Economic Affairs Airlangga Hartarto emphasized that downstreaming serves as the foundation for the Asta Cita mission and for strengthening economic value-added. Indonesia must not continue exporting raw materials but must instead build the capacity to process them into higher-value products that create employment. The government has now prepared a downstreaming roadmap for 28 strategic commodities through 2040, representing a potential investment value of USD 618 billion and the creation of more than 3 million jobs. These commodities include minerals, coal, oil and gas, as well as nature-based resources such as palm oil, seaweed, biofuels, shrimp, and timber.
Moreover, sustainability is becoming a key focus of downstreaming policy. The government underscores the importance of responsible natural resource management to ensure that the economic gains can be enjoyed by future generations. Industries must adopt environmental standards, energy efficiency measures, and emissions reduction. Through the application of green industry principles, downstreaming strengthens the economy while preserving regional ecosystems. This approach aligns with the national development direction toward a green and low-carbon economy, as well as responding to global demands for more sustainable industrial practices.
Ultimately, downstreaming is the government’s grand strategy to ensure that regional economic growth does not stagnate or remain dependent on volatile raw material prices. Through downstreaming, regions that traditionally served as raw material producers now have the opportunity to transform into centers of high-value production. The benefits extend not only to large businesses but also to communities, MSMEs, and local governments. With consistent policies, strong interagency synergy, and active support from the private sector and the public, downstreaming is expected to become the main engine that drives Indonesia’s economic transformation toward a more resilient, modern, and inclusive structure. The government is optimistic that this approach will form a strong foundation for Indonesia to achieve economic self-reliance and emerge as a significant industrial power at the global level.
*) Economic Observer