Downstreaming Drives Economic Equality by Strengthening the Added Value of Natural Resources
By: Gavin Asadit )*
The government continues to strengthen the downstreaming agenda as a key strategy to promote national economic equality by increasing the added value of natural resources. As 2025 approaches, the government has reiterated various new policies, accelerated investment, and industrial infrastructure development as proof of its commitment to making downstreaming the foundation of Indonesia’s economic transformation.
President Prabowo Subianto emphasized the acceleration of downstreaming projects in a limited meeting at the Palace and ordered the immediate execution of 18 priority projects that have undergone pre-FS studies, as they are deemed capable of fostering synergy between sectors and creating jobs in commodity-producing regions. This directive was presented as part of efforts to make downstreaming not only an industrial policy but also an instrument for equitable development.
On the ground, the downstreaming program has begun to yield concrete figures. Projections by the government and industry players indicate that accelerating nickel downstreaming alone will result in hundreds of processing facilities: financial media reported plans to build up to 170 nickel smelters as part of the expansion of the domestic nickel industry value chain, which is also closely linked to the development of the electric vehicle battery ecosystem. Long-term projections even place significant investment value and employment impacts on the scale.
Deputy Minister of Energy and Mineral Resources, Yuliot Tanjung, emphasized the government’s optimism regarding the macroeconomic benefits of downstreaming, as the program is projected to attract significant investment and create millions of new jobs, while simultaneously increasing exports of value-added products. In a public presentation this week, Yuliot mentioned projected investment targets reaching hundreds of billions of US dollars over the next few decades, with the potential to create around 3 million jobs. This statement reinforces the government’s narrative that downstreaming is a path to transforming the national economic structure.
Minister of Industry, Agus Gumiwang Kartasasmita, emphasized the importance of developing a comprehensive national industrial framework, which he called the New National Industrialization Strategy (SBIN), so that the downstreaming process is directed, sustainable, and reaches all the way from the upstream to downstream supply chain to micro and medium enterprises. According to Agus, strengthening policies, improving the quality of human resources, and synergizing research, industry, and education are key to ensuring that the benefits of downstreaming are distributed evenly, not concentrated only in large industrial areas.
One of the goals of downstreaming is to strengthen national independence through import substitution. With the increase in domestic production capacity for various industrial components and natural resource derivative products, the government assesses that the trade balance will become healthier in the medium term. This approach also supports the resilience of the national industry to global fluctuations.
On various occasions, the government has also emphasized that downstreaming is carried out with a focus on sustainability. Strict environmental standards, the use of environmentally friendly technologies, and green industry certification continue to be strengthened. This is crucial to ensure that industrial development does not compromise environmental quality and continues to provide long-term benefits to the community.
Downstreaming is also interpreted as a long-term effort to strengthen national independence. By reducing dependence on imported raw materials and industrial components, Indonesia can be more resilient to global price fluctuations and geopolitical changes. Robust domestic production will strengthen Indonesia’s position in the international market and provide greater control over strategic supply chains. This also means strengthening domestic industries across various sectors, enabling the national economy to grow on a stronger and more stable foundation. The government claims that the downstreaming project package will encourage significant import substitution, from fuel to industrial raw materials, potentially improving the medium-term trade balance.
With an increasingly comprehensive policy framework, the government is optimistic that downstreaming will be a turning point in Indonesia’s economic transformation. This agenda will shift the economic structure from a reliance on raw material exports to high-value-added industries. Equitable distribution of benefits, from job creation and increased regional prosperity to the growth of downstream industries, is a key goal that continues to be pursued.
Achieving economic equality through downstreaming requires a balance between the speed of implementation and the depth of structural reforms. The acceleration of major projects must be balanced with pro-inclusive policies that strengthen local capacity, protect the environment, and provide transparency in investment management. If this synergy is successfully realized, downstreaming has the potential to transform the economic landscape.transforming the nation from a mere exporter of raw materials to a producer of high-value products, while simultaneously achieving greater equity in natural resource-producing regions.
)* The author is an observer of social and community issues.
