ESDM Pushes for Downstreaming to Finished Products, Here is the Industry Players' Response

The government is continuously pushing for the strengthening of downstream processing of natural resources so that it does not stop at raw or semi-finished products, but instead produces high-value-added end products. Director General of Minerals and Coal at the Ministry of Energy and Mineral Resources (ESDM), Tri Winarno, emphasised that Indonesia’s future industrialisation direction is to reduce the export of raw materials and strengthen domestic downstream industries. “The industrialisation we hope for is no longer selling raw materials, but selling finished products. From raw commodities, it can rise to end products with higher added value,” said Tri at the “Unlocking Growth in the Middle-Income Trap” event held by Tutur Media on Tuesday (7/4). He gave the example that commodities like rubber should no longer be sold as raw materials, but processed into end products such as tyres. In this way, commodity price fluctuations can be suppressed, and the economic value obtained is more stable. Nevertheless, Tri acknowledged that currently Indonesia is still largely at the intermediate product stage and has not fully reached the final downstream stage. According to him, the policy of banning raw material exports regulated since Law Number 4 of 2009 has successfully encouraged the development of domestic processing industries. In the future, the government will continue this strategy so that the industry moves further to produce finished products. “The industry has started to form up to intermediate products. Now the challenge is how to push it to end products. This is what we are continuously striving for with intensive communication with industry players,” he said. Meanwhile, Chairman of the Indonesian Nickel Industry Forum, Arif Perdana Kusumah, assessed that Indonesia’s nickel downstream programme has shown significant progress since it began in 2014 through the ban on nickel ore exports. He revealed that Indonesia’s nickel processing capacity has increased to around 1.7 million tonnes, while production reaches around 2.5 million tonnes up to 2025. However, most of it is still in the form of intermediate products. “Around 90% of our nickel products are still exported as intermediate. Then processed abroad and returned to Indonesia at a higher price,” he stated. Arif emphasised that in the future, Indonesia needs to strengthen downstream processing so that it does not stop at the initial stage, but is able to produce end products domestically. He aligns with the government that this step is important to strengthen national industrialisation as well as increase added value and economic competitiveness. “The downstream programme must be pushed deeper so that we truly produce finished goods domestically,” he concluded.