By: Gavin Asadit )*
The Indonesian government continues to strengthen the foundations of the national economy through its industrial downstreaming policy, which has now entered an accelerated phase. One of the strategic steps drawing attention in early 2026 is the plan to realize downstreaming investments worth Rp100 trillion through a number of major projects across various regions. This investment is seen as a new engine of regional economic growth, while also serving as an effort to reduce Indonesia’s dependence on raw material exports.
Downstreaming has become a key government policy in recent years, as it is considered capable of increasing the added value of natural resources, creating jobs, and strengthening the national industrial structure. The Rp100 trillion downstreaming projects scheduled to begin construction in early 2026 will cover the processing industry, energy, waste management, and renewable energy sectors. These projects are not concentrated solely on Java Island, but also target regions that have long served as centers of natural resources, and are therefore expected to promote more balanced regional development.
President of the Republic of Indonesia, Prabowo Subianto, has given direct attention to the realization of this downstreaming investment. In his meeting with the Minister of Investment and Downstreaming/Head of BKPM, Rosan P. Roeslani, the President emphasized that downstreaming is the key to strengthening national economic independence. He assessed that large-scale investments in downstream industries would deliver long-term benefits to regional economies, particularly through job creation and increased community income. He also stressed the importance of accelerating project realization so that the benefits can be felt by regions as soon as possible.
The government has recorded that downstreaming investment trends showed significant growth throughout 2025. Realized downstreaming investment through the third quarter of 2025 reached more than Rp431 trillion, a sharp increase compared to the same period in the previous year. This achievement indicates a positive response from the business community to the government’s policy direction, while also signaling growing investor confidence in Indonesia’s investment climate. With the addition of new downstreaming projects worth Rp100 trillion, the government is optimistic that national investment performance in 2026 will be even stronger.
The impact of downstreaming investment is reflected not only in national economic growth figures, but also in regional economic dynamics. The presence of processing industries near raw material sources encourages the growth of new economic activities, ranging from logistics and services to micro and small enterprises that support industrial operations. This contributes to increases in Gross Regional Domestic Product (GRDP) and local employment absorption. Regions that previously relied heavily on the primary sector are now beginning to develop more diversified industrial bases.
Minister of Investment and Downstreaming Rosan P. Roeslani stated that the Rp100 trillion downstreaming projects are designed to generate broad multiplier effects. According to him, downstreaming is not merely about building factories, but about developing an integrated industrial ecosystem from upstream to downstream. Rosan emphasized that these investments are expected to strengthen national supply chains, enhance the competitiveness of domestic products, and encourage technology transfer to the regions. He also underscored the importance of involving regional governments so that projects can be implemented effectively and sustainably.
Support for strengthening downstreaming also comes from Coordinating Minister for Economic Affairs Airlangga Hartarto. He views industrial downstreaming as a vital instrument for driving regional economic growth above the national average. Airlangga urged regional governments to actively create a conducive business climate, including through licensing simplification and the provision of supporting infrastructure. According to him, regions that are able to manage downstreaming potential effectively have the opportunity to achieve high economic growth while reducing poverty and inequality.
Despite offering significant opportunities, the implementation of downstreaming investments also faces several challenges. Infrastructure readiness, the availability of skilled labor, and the harmonization of central and regional policies are crucial factors that must be addressed. In addition, environmental sustainability is a key concern, given that some downstreaming projects are directly linked to natural resource management. The government has emphasized that every project must adhere to the principles of sustainable development and take environmental and social aspects into account.
Going forward, the success of the Rp100 trillion downstreaming investment will largely depend on synergy between the central government, regional governments, and the private sector. If implemented consistently and in a coordinated manner, downstreaming has the potential to become a major driver of regional economic transformation—from economies based on raw commodities to high value-added economies. With strong policy support and effective oversight, these downstreaming projects are expected to serve as a foundation for inclusive and sustainable regional economic growth in 2026 and beyond.
)* The author is an observer of social and community issues.*