In his works on industrialisation, Sumitro Djojohadikusumo stressed\nthe importance of leveraging comparative advantages, building\nfuture-oriented upstream industries, and creating structural linkages\nbetween upstream and downstream sectors (Djojohadikusumo, 1986). For\nSumitro, without cross-sectoral linkages, economic independence is\nmerely a statistical illusion.<\/p>\n
Several decades later, the same principle urgently applies to the\ndigital economy. Every second, hundreds of millions of Indonesians\ngenerate vast data flows\u2014from online shopping clicks, travel histories,\nto content preferences. Yet, much like raw nickel ore once exported,\nthis digital wealth mostly flows to servers in Silicon Valley, Shenzhen,\nor Singapore without domestic processing.<\/p>\n
Yet, if Indonesia dared to halt raw nickel exports in 2020 to build\ndomestic industry, why not do the same for data\u2014the most valuable\ncommodity of the 21st century?<\/p>\n
Before discussing data downstreaming, empirical evidence from natural\nresource downstreaming must be highlighted. The raw nickel export ban\ninitially sparked criticism, with the EU filing a WTO complaint and\nglobal economists labelling it protectionist.<\/p>\n
Yet, five years later, results speak clearly. In 2024, downstream\nnickel products generated approximately $33.9 billion in exports\u2014a\ndramatic surge compared to the raw export era. Indonesia now controls\nover half of global refined nickel production, with reserves of around\n55 million tonnes out of the world\u2019s total 130 million tonnes (USGS,\n2024; Ministry of Energy and Mineral Resources, 2025).<\/p>\n
This success aligns with Hartwick\u2019s rule (1977), which states that\nprofits from non-renewable resources must be reinvested into productive\ncapital\u2014here, through smelters, battery supply chains, and downstream\nindustries.<\/p>\n
This momentum confirms Sumitro\u2019s upstream-downstream linkage\nprinciple is not theoretical dogma but an operational strategy\ndelivering tangible benefits with measured political costs.<\/p>\n
Data Colossus Still Selling Raw<\/p>\n
Indonesia is a global data giant. A Google, Temasek, and Bain report\n(2025) projects Indonesia\u2019s digital economy to reach $180-340 billion by\n2030. Yet, much like nickel\u2019s past, the highest value from this data\nflow is captured by foreign entities.<\/p>\n
This phenomenon, termed \u2018data colonialism\u2019 by Couldry and Mejias\n(2019), continues colonial extraction logic through algorithms and\nglobal platforms.<\/p>\n
Mordor Intelligence (2026) forecasts Indonesia\u2019s cloud market to\nsurge to $5.5 billion by 2031, growing at 14.32% annually. However,\ndigital revenue is still dominated by foreign hyperscalers such as\nAmazon Web Services, Microsoft Azure, Google Cloud, and Alibaba Cloud.\nAround 66.05% of the domestic cloud market in 2025 consists of public\ndeployments, largely served by foreign tech giants.<\/p>\n
Mazzucato (2018) warns markets do not neutrally set value\u2014governments\nmust actively shape where value flows. Without strategic moves, the\ndigital economy risks falling into extractive institutions (Acemoglu\n& Robinson, 2012), where digital wealth is continually extracted\nfrom the domestic ecosystem.<\/p>\n
Reality shows the largest profits in the digital value chain are\nlocked in algorithm and platform tiers, not raw data collection. If\nIndonesia settles for being a raw data extraction site, this structural\nimbalance will never shift.<\/p>\n
Three Pillars of Digital Downstreaming<\/p>\n
Digital downstreaming cannot be resolved by a single policy.\nCoordinated interventions across three data value chain pillars are\nneeded, drawing lessons from nickel\u2019s success.<\/p>\n
The first pillar is processing infrastructure. Like smelters refining\nore into ferronickel, Indonesia needs massive computing capacity to\ntransform raw data into high-value AI models and services.<\/p>\n
Critical initial steps have begun with the National Data Centre (PDN)\nin Cikarang, though full operation awaits security assessments. However,\nthis effort is insufficient as most commercial data centres remain\ncontrolled and operated by foreign tech giants.<\/p>\n
Genuine digital downstreaming demands genuine domestic ownership and\noperational control\u2014not merely placing servers or physical\ninfrastructure in the country. In this context, the World Bank (2025)\nalso stresses the importance of digital compatibility standards to\nensure interoperability and reduce foreign tech dependence.<\/p>\n
The second pillar is algorithmic capability. Nickel becomes battery\ncathodes not just due to smelters but skilled electrochemists. Data\ndownstreaming requires talent capable of building sector-specific\nmachine learning models. The target of 9 million digital talents by 2030\nneeds re-evaluation on quality.<\/p>\n
Currently, most training programs produce platform operators\u2014not\nalgorithm architects. World Bank research found only around 10% of jobs\nin East Asia and the Pacific involve AI-complementary tasks, far below\nadvanced economies that<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/sumitronomics-4-0-digital-downstreaming-a-momentum-not-to-be-missed-1780161525", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }