By: Aditya Akbar )*
The government continues to accelerate investment to strengthen downstream industries in various strategic sectors. This step will not only increase the added value of domestic natural resources, but also open up more jobs and strengthen Indonesia’s competitiveness in the global arena.
President Prabowo Subianto has implemented downstream and investment policies as part of Indonesia’s grand economic transformation strategy. His government is committed to ensuring that the added value of natural resources can be enjoyed domestically, not just as raw materials for export. Through this step, Indonesia is increasingly attracting large investments in the mining, energy, and manufacturing sectors.
The Minister of Energy and Mineral Resources (ESDM), Bahlil Lahadalia emphasized that the government has targeted large investments to encourage industrial downstreaming. The sectors being focused on include oil and gas, mining, agriculture, and maritime. According to Bahlil, the government is targeting downstream investment of around USD618 billion by 2025 to accelerate the national economic transformation.
As an initial stage, the government has prepared 21 downstream projects with a total investment of USD40 billion. Several of these projects will be funded by the Daya Anagata Nusantara Investment Management Agency (BPI Danantara), as a concrete form of accelerating the realization of the program.
One of the main projects is the construction of an oil storage facility on Nipah Island which is expected to increase national energy security. With sufficient storage capacity to meet national energy needs for 30 days, this project will be part of a long-term strategy in maintaining energy stability.
In the energy sector, the government is also designing the construction of an oil refinery with a capacity of 500 thousand barrels per day, making it one of the largest processing facilities in Indonesia. This project aims to reduce dependence on fuel imports, ensure the availability of domestic energy, and increase the efficiency of the national energy supply chain.
Not only that, the government is also developing a coal gasification program to produce dimethyl ether (DME) as a substitute for LPG. This project will be developed in South Sumatra, East Kalimantan, and South Kalimantan with a domestic resource-based approach. With this strategy, the government wants to ensure that downstreaming can have a direct impact on the community and local economy.
President Prabowo has set 26 commodity sectors as national downstreaming priorities, including the mineral, fisheries, agriculture, plantation, and forestry sectors. This decision was taken to ensure that downstreaming does not only focus on one particular sector, but can create a broad impact on the national economy.
Similarly, CORE Indonesia Economist Muhammad Faisal said that the downstreaming program to be carried out by the government is a good plan considering that there are still many domestic commodities that are underdeveloped so that they have less added value. In addition, the program is also related to the domino effect that will be felt domestically, such as job creation.
This downstreaming policy is seen as a positive step that will increase the added value of various commodities in Indonesia. Downstreaming not only provides economic benefits, but also has an impact on the creation of large numbers of jobs. With downstreaming in the agricultural sector, for example, domestic food prices can be more stable and more farmers will benefit economically.
However, there are still many aspects that need to be improved from previous downstreaming experiences. The nickel downstreaming program, for example, still faces challenges in creating linkages with the local economy around the smelter location. In addition, environmental impacts must also be a major concern so that the downstream industry does not have a negative effect on the surrounding community.
Downstreaming is not just an economic policy, but also a long-term strategy to create national independence. By optimally utilizing natural resources and increasing their added value domestically, Indonesia can reduce dependence on exports of raw materials and imports of finished products.
Investment in downstreaming will also create a large multiplier effect. In addition to opening up new jobs, the downstream industry will encourage innovation and technological development domestically. This is an opportunity for the younger generation to play a role in industrial transformation and building a more sustainable business ecosystem.
The success of downstreaming does not only depend on government policies and investment from the private sector, but also requires active support from the community. The community can play a role in various aspects, starting from increasingan awareness of the importance of downstreaming to become part of a growing industrial ecosystem.
The community needs to support domestic products produced through the downstreaming process. By increasing consumption of local products, the community helps strengthen the national industry and reduce dependence on imported products.
In the long term, downstreaming will be the driving force of a more inclusive and sustainable economy. Therefore, support from various parties, including the business world, academics, and the wider community, is needed so that this program can run optimally. With a spirit of collaboration, we can ensure that investment and downstreaming will bring real benefits to Indonesia’s future.
)* The author is an Economic Observer