AMMAN Investment and Operations Contribute IDR 173 Trillion to National Economy, 2018-2024

LPEM FEB UI Study: AMMAN Investment and Operations Contribute IDR 173 Trillion to the National Economy 2018-2024

JAKARTA - The Institute of Economic and Social Research, Faculty of Economics and Business, University of Indonesia (LPEM FEB UI) released the results of a study entitled ‘Analysis of the Macroeconomic and Socioeconomic Impact of PT Amman Mineral Nusa Tenggara (AMMAN)’ which estimates the contribution of mining activities, smelter construction, and AMMAN Community Development and Empowerment (PPM) programs to the national and regional economies throughout the period 2018 to 2024.

This study uses an economic multiplier approach based on Inter-Regional Input-Output(IRIO) to estimate the economic impact of investment, operational, and AMMANcommunity empowerment programs on the national and regional economies. Thisapproach not only calculates direct impacts such as spending on goods andservices to contractors, suppliers or other sectors related to AMMAN business, butalso indirect impacts, namely economic activities that arise when suppliersproduce to meet these needs.

Through the intersectoral and interregional linkages, this series of activities creates a multiplier effect not only in the AMMAN location area but also its linkages with other regions.

This study found that AMMAN activities contribute significantly to the national economy through increased output, the formation of Gross Domestic Product (GDP), job creation, as well as strengthening Indonesia’s fiscal and external balance positions. Throughout the study period, AMMAN’s contribution to the formation of the national GDP reached IDR 173.4 trillion, or an average of IDR 24.8 trillion per year, equivalent to around 0.13 percent of the national GDP at current prices in 2024.

In addition to macro contributions, the study also shows extensive socio-economic impacts. According to Uka Wikarya, Head of Natural Resources and Energy Studies at LPEM FEB UI, AMMAN business activities play a role in opening economic opportunities for people in various regions.

“The findings of the study show that AMMAN’s contribution is not only visible in macro figures, but also at the household and community levels. AMMAN’s operational activities create a wide range of multiple effects. For example, the need for food supply for thousands of employees also brings life to the businesses of local farmers, livestock farmers, and food suppliers. Likewise with the need for logistics and other services that open up employment opportunities in various sectors and regions. This is what makes the economic growth triggered by AMMAN have a wide-scale impact and reach various levels of society,” said Uka, Tuesday, March 10.

The study also noted an increase in community welfare through the creation of household income of IDR 67.6 trillion during the study period. This increase in income also contributed to a reduction in the national poverty rate by 0.024 to 0.098 percentage points (or about 80 thousand to 206 thousand people), and a reduction in the national unemployment rate by 0.012 to 0.069 percentage points (or about 29 thousand to 90 thousand people).

On the fiscal side, AMMAN also contributes substantially to state revenues. Throughout the period 2018 to 2024, the total fiscal contribution of the company, both direct payments to the state treasury and indirectly by taxpayers affected by AMMAN activities, reached IDR 39.05 trillion, which includes tax payments, royalties, and non-tax state revenues (PNBP), as well as an increase in fiscal revenues from related sectors.

From an external perspective, AMMAN’s export activities also have the potential to contribute positively to Indonesia’s balance of payments. Total company exports reached 10.29 billion US dollars during the study period, resulting in a net foreign exchange savings of USD7.66 billion, or an average of USD1.09 billion per year. These findings indicate AMMAN’s role in strengthening Indonesia’s external stability and foreign exchange reserves.

Impact on Regional and National EmploymentIn terms of employment, AMMAN activities have on average generated around 55 thousand jobs per year nationally. This figure reaches its peak in 2024 with more than 105 thousand job opportunities. The creation of these jobs does not only come from the company’s direct operational activities, but also through the multiplier effect on other economic sectors that are directly and indirectly connected in the domestic supply chain.

In the future, LPEM FEB UI assesses that the operation of the AMMAN copper smelter is expected to further increase domestic added value, strengthen the downstream processing of the national mineral industry, and encourage the development of downstream industries based on metals such as electronics, energy, and manufacturing. With the support of appropriate policies and strengthening the downstream industry ecosystem, AMMAN has the potential to become one of the drivers of the national economic structure, increasing the added value of natural resources, and encouraging sustainable and inclusive economic growth in Indonesia.