By: Emil Kurniawan )*
The government continues to demonstrate its commitment to driving national economic growth through increased investment and strengthening downstreaming. This step is the main strategy to create domestic added value and increase the competitiveness of the national industry in the global market.
One real example of this policy is the investment realization target set by the Ministry of Investment/Investment Coordinating Board (BKPM) for West Nusa Tenggara Province (NTB) in 2025. The target reaches IDR 61.09 trillion, much higher than in 2024 which was only around IDR 26.9 trillion. This target spike shows the government’s determination to boost investment as a driving force for the regional economy.
However, this ambitious target is not without challenges. The Head of the NTB Investment and One-Stop Integrated Service Office (DPMPTSP), H. Mohammad Rum, expressed the need to reconsider the target, considering the budget efficiency policy that is currently being implemented. The reduction in special allocation funds (DAK) which were previously one of the sources of operational funding is considered to be able to complicate efforts to achieve the set investment.
However, the achievement of NTB’s investment realization in 2024 provides optimism. With an investment value exceeding the target, reaching IDR 54.5 trillion, the central government believes that this region has great potential to continue to develop. The energy and mineral resources (ESDM) sector is the largest contributor to investment in NTB, with a value reaching IDR 37 trillion, followed by the industrial sector as well as tourism and the creative economy.
However, dependence on the mining sector is also a concern. With the end of the AMMAN Mineral concentrate export permit in West Sumbawa at the end of 2024, the mining industry must adapt to the downstream policy that has been initiated by the government. The Minister of Investment/Head of BKPM, Bahlil Lahadalia, emphasized that the presence of a new smelter in the region is expected to be able to encourage domestic processing of raw materials, create jobs, and increase the export value of finished products.
In early 2025, the impact of this policy began to be felt. The contraction in the NTB mining sector can be seen from the decline in export value of up to 97.12 percent compared to December 2024. Although this poses a short-term challenge, in the long term the downstream strategy will provide greater benefits for the regional and national economy. The shift from exporting raw materials to processed products will increase the added value of the industry and reduce dependence on fluctuations in global commodity prices.
In addition, downstreaming will also create a positive chain effect for other supporting industries, such as logistics, manufacturing, and labor. With the growing processing industry, the need for skilled labor is increasing. Therefore, investment is needed in the education and vocational training sectors so that the local workforce can adapt to the demands of a more advanced industry.
Senior economist from the Institute for Development of Economics and Finance (INDEF), Tauhid Ahmad, assessed that the government must also ensure that there are incentives for investors who are willing to invest in downstream projects. Tax relief, adequate infrastructure facilities, and legal certainty are very important factors for the success of this program. In addition, cooperation between the central and regional governments in simplifying investment regulations will help attract domestic and foreign investors.
Not only that, strengthening the competitiveness of domestic products is also an important part of the downstream strategy. By increasing the production of finished or semi-finished goods domestically, Indonesia can reduce dependence on imports and increase exports of high value-added products. This will have an impact on improving the trade balance and strengthening Indonesia’s position in the global supply chain.
To achieve the investment targets that have been set, the central and regional governments need to work together to create policies that support a conducive investment climate. Increasing the ease of doing business, fiscal incentives for investors, and strengthening infrastructure are important factors in attracting new investment. In addition, the development of the downstream sector must be accompanied by increasing the capacity of human resources in order to support a more advanced and sustainable industry.
The government’s commitment to encouraging investment and downstreaming is not only limited to numerical targets, but must also be accompanied by concrete steps that have a direct impact on society. Development of industrial infrastructure, improving investment regulations, and improving the quality of the workforce are important aspects that must be considered. Thus, the benefits of downstreaming and investment can be felt evenly by all lcommunity layers.
Investment and downstreaming are key for Indonesia in realizing inclusive and sustainable economic growth. Therefore, all elements of society, including the government, business world, and academics, need to contribute to supporting this agenda. With a strong commitment and planned steps, Indonesia can become a center for high value-added industries that are able to compete on the global stage.
)* The author is a contributor to the Nusa Bangsa Institute
