Indef assesses Danantara downstream projects could drive inclusive growth
Jakarta (ANTARA) - The Institute for Development of Economics and Finance (Indef) has assessed that Danantara's downstream processing projects have the potential to drive more inclusive economic growth through increased productivity, investment, and improved distribution of economic benefits over the medium to long term.
Indef Executive Director Esther Sri Astuti, contacted in Jakarta on Friday, said that Danantara's design as a strategic government investment fund could strengthen national production capacity and broaden the base of economic growth.
The projects being undertaken, she said, are directed at optimising national assets and the economy, thereby improving production efficiency — including logistics, operational costs, and more targeted capital allocation.
Based on fiscal and macroeconomic policy simulations used by Indef, the implementation of Danantara's downstream projects is projected to increase gross domestic product (GDP) output significantly, approaching approximately 3 per cent above baseline in the initial phase before stabilising at a higher level over the long term.
This increase, she said, is driven primarily by capital accumulation and improvements in total factor productivity (TFP), which strengthen economic capacity.
"This demonstrates persistent growth, not a temporary spike," she said.
Furthermore, she noted that aggregate household consumption is also expected to increase gradually in line with rising real incomes and productivity. Although there may be short-term consumption adjustments due to changes in savings and investment patterns, these conditions are considered a transitional response towards greater economic benefits in the future.
Indef also observed that the distributional impact of this policy shows responses across various income groups, including a relatively higher increase in labour supply among lower-income groups. This, she said, reflects opportunities for broader income growth and economic participation, thereby reinforcing the inclusive character of the resulting growth.
"After the adjustment period, wages move upward in a stable and sustained manner, in line with the strengthening of production capacity and economic activity," she said.
On the fiscal side, the establishment of Danantara is assessed as maintaining the sustainability of the state budget. The institute considers the debt-to-GDP ratio to be moving close to baseline, whilst tax revenues have the potential to increase in line with the expansion of the tax base resulting from higher economic growth — rather than from rate increases.
Indef stressed that Danantara's success in creating inclusive growth depends heavily on the quality of governance, appropriate project selection, and consistency of supporting policies.
BPI Danantara has prepared 20 strategic downstream projects with total investment reaching US$26 billion, expected to absorb more than 600,000 workers.
Previously, Danantara conducted the groundbreaking of six Phase I downstream projects on Friday (6 February 2026), with the following details:
- Bauxite-to-alumina and aluminium downstream projects in Mempawah, West Kalimantan (SGAR 1 and SGAR 2), with total investment of US$3 billion and increased production capacity in Kuala Tanjung, North Sumatra.
- A bioethanol project in Glenmore, Banyuwangi, East Java, producing 30,000 kilolitres of ethanol per year.
- A biorefinery project in Cilacap, Central Java, producing up to 6,000 barrels per day of aviation fuel.
- Integrated poultry facilities in Malang, North Gorontalo, South Lampung, South Sulawesi, East Kalimantan, and West Nusa Tenggara, capable of adding 1.5 million tonnes of chicken meat and 1 million tonnes of eggs in production, whilst creating 1.46 million new jobs.
- Salt and mechanical vapour recompression (MVR) plants in Gresik, Manyar, and Sampang, which will add 380,000 tonnes per year to PT Garam's production capacity, simultaneously strengthening salt self-sufficiency.
Indef Executive Director Esther Sri Astuti, contacted in Jakarta on Friday, said that Danantara's design as a strategic government investment fund could strengthen national production capacity and broaden the base of economic growth.
The projects being undertaken, she said, are directed at optimising national assets and the economy, thereby improving production efficiency — including logistics, operational costs, and more targeted capital allocation.
Based on fiscal and macroeconomic policy simulations used by Indef, the implementation of Danantara's downstream projects is projected to increase gross domestic product (GDP) output significantly, approaching approximately 3 per cent above baseline in the initial phase before stabilising at a higher level over the long term.
This increase, she said, is driven primarily by capital accumulation and improvements in total factor productivity (TFP), which strengthen economic capacity.
"This demonstrates persistent growth, not a temporary spike," she said.
Furthermore, she noted that aggregate household consumption is also expected to increase gradually in line with rising real incomes and productivity. Although there may be short-term consumption adjustments due to changes in savings and investment patterns, these conditions are considered a transitional response towards greater economic benefits in the future.
Indef also observed that the distributional impact of this policy shows responses across various income groups, including a relatively higher increase in labour supply among lower-income groups. This, she said, reflects opportunities for broader income growth and economic participation, thereby reinforcing the inclusive character of the resulting growth.
"After the adjustment period, wages move upward in a stable and sustained manner, in line with the strengthening of production capacity and economic activity," she said.
On the fiscal side, the establishment of Danantara is assessed as maintaining the sustainability of the state budget. The institute considers the debt-to-GDP ratio to be moving close to baseline, whilst tax revenues have the potential to increase in line with the expansion of the tax base resulting from higher economic growth — rather than from rate increases.
Indef stressed that Danantara's success in creating inclusive growth depends heavily on the quality of governance, appropriate project selection, and consistency of supporting policies.
BPI Danantara has prepared 20 strategic downstream projects with total investment reaching US$26 billion, expected to absorb more than 600,000 workers.
Previously, Danantara conducted the groundbreaking of six Phase I downstream projects on Friday (6 February 2026), with the following details:
- Bauxite-to-alumina and aluminium downstream projects in Mempawah, West Kalimantan (SGAR 1 and SGAR 2), with total investment of US$3 billion and increased production capacity in Kuala Tanjung, North Sumatra.
- A bioethanol project in Glenmore, Banyuwangi, East Java, producing 30,000 kilolitres of ethanol per year.
- A biorefinery project in Cilacap, Central Java, producing up to 6,000 barrels per day of aviation fuel.
- Integrated poultry facilities in Malang, North Gorontalo, South Lampung, South Sulawesi, East Kalimantan, and West Nusa Tenggara, capable of adding 1.5 million tonnes of chicken meat and 1 million tonnes of eggs in production, whilst creating 1.46 million new jobs.
- Salt and mechanical vapour recompression (MVR) plants in Gresik, Manyar, and Sampang, which will add 380,000 tonnes per year to PT Garam's production capacity, simultaneously strengthening salt self-sufficiency.