By: Ardian Pratama )*
Indonesia’s national development direction is entering a crucial phase where economic growth is no longer measured solely by speed, but by quality, resilience, and its impact on the environment and public welfare. It is in this context that industrial downstreaming and the green economy have emerged as two key, mutually reinforcing strategies. The government under President Prabowo Subianto has positioned downstreaming as the foundation for strengthening the national economic structure, while aligning it with the energy transition and sustainable development agendas.
Downstreaming is no longer understood merely as increasing the added value of commodities, but as an instrument of economic transformation that impacts job creation, equitable regional development, and increased national industrial competitiveness. This is reflected in the government’s commitment to accelerate 18 strategic downstreaming projects, whose feasibility studies are currently being finalized with the Daya Anagata Nusantara Investment Management Agency (Danantara). Ahmad Erani Yustika, Secretary General of the Ministry of Energy and Mineral Resources, explained that accelerating the completion of feasibility studies is key to ensuring the most ready projects can be executed promptly, in line with the President’s hope that strategic decisions will be made by the end of the year.
The list of downstreaming projects demonstrates an increasingly comprehensive approach. From the processing of minerals such as bauxite, nickel, copper, and iron sand, to the downstreaming of the energy, food, maritime, and bioenergy sectors, everything is designed to create added value domestically. Hundreds of trillions of rupiah in investments spread from Papua to Aceh emphasize that downstreaming is not a sectoral agenda, but rather a national strategy to promote inclusive and equitable growth across the region. The presence of projects in regions such as Sarmi, Fakfak, Kupang, and Morowali also reinforces the message that development is no longer concentrated in Java.
However, the strength of downstreaming today lies in its ability to transform in line with green economy principles. The government recognizes that uncontrolled industrialization risks creating environmental and social problems in the future. Therefore, the downstreaming agenda is being pushed in line with low-emission commitments, the implementation of ESG principles, and the strengthening of a circular economy. Minister of Energy and Mineral Resources Bahlil Lahadalia, as Chair of the National Downstreaming and Energy Security Task Force, has repeatedly emphasized that energy security and economic added value must go hand in hand with environmental protection and long-term sustainability.
This approach is reflected in the implementation of the 2025 Energy and Downstreaming Consultative Meeting, initiated by the Downstreaming Task Force. This forum opened a space for cross-sector dialogue to bring downstreaming and energy transition issues closer to the public, particularly the younger generation. The Secretary General of the Energy Sovereignty Initiative, Rio Anggara, emphasized the importance of a comprehensive understanding of the interconnectedness between the processing industry, energy security, and ecological sustainability. The discussion demonstrated that modern downstreaming cannot be separated from social and ecological dimensions, including the protection of communities in resource-producing areas.
A similar view was expressed by Ridha Saleh, a member of the Downstreaming Task Force, who highlighted the importance of ecological justice in every industrialization policy. Meanwhile, Arsal Ismail, President Director of PT Bukit Asam Tbk, explained how state-owned energy companies are beginning to transform into low-emission industries through technological innovation and more responsible resource management. The presence of figures such as Melliza Xaviera Putri, representing the younger generation, also demonstrated that the green economy agenda has become a cross-generational issue that requires broad participation.
On the financing side, the government’s commitment is evident in the strengthening of the Just Energy Transition Partnership scheme. The government has allocated up to IDR 350 trillion in financing to accelerate the energy transition, as part of its strategy to promote a green economy while maintaining growth momentum. Coordinating Minister for Economic Affairs Airlangga Hartarto emphasized that the energy transition is designed to be a new engine of economic growth towards the 8 percent target by 2029. The increasing international commitment through JETP also reflects global confidence in Indonesia’s policy direction.
Downstream energy transition and energy, supported by green financing, open up significant opportunities for the development of low-carbon technologies, renewable energy, and innovation-based industries. Projects such as the Sulawesi Green Energy Corridor, dedieselization, the development of integrated solar modules, and bio-avtur from used cooking oil, provide concrete evidence that the green economy agenda has been translated into tangible projects with direct economic impact. This combination of downstream resources and clean energy differentiates Indonesia’s current strategy from the old development model, which relied on raw material exports.
Ilirization and a green economy are not just policy jargon, but strategic answers to the structural challenges of the national economy. By ensuring domestic added value, maintaining environmental sustainability, and engaging the community and the younger generation, the government is positioning Indonesia on a path to higher-quality and more resilient growth. Consistent implementation, cross-ministerial coordination, and strong public communication will be key to ensuring this grand strategy is not only successful on paper, but truly felt by all Indonesians.
)* National Development Policy Observer