Indonesia Affirms Investment and Downstream Processing Requirements for US Access to Critical Minerals
Jakarta – Deputy Minister of Investment and Downstream Processing, and Head of the Investment Coordinating Board (BKPM), Todotua Pasaribu, has affirmed that the United States’ access to Indonesia’s critical minerals, including rare earth elements, will only be granted within a trade agreement framework that requires investment and domestic downstream processing. This statement was made in response to US requests for easier access for American businesses to Indonesia’s mineral sector.
“Essentially, the US request to provide American business operators with access to our mineral sectors, including rare earth, is not a problem,” said Todotua to journalists following the PP 28/2025 Socialisation event in Jakarta on Thursday, 26 February 2026, as reported by Antara.
The Deputy Investment Minister’s statement underscores Indonesia’s commitment to maximising the added value of its natural resources through downstream processing. The Indonesian government strictly prohibits the export of raw materials without processing, a policy aimed at attracting investment in the processing and manufacturing sectors, creating employment, and increasing state revenue.
According to Todotua, Indonesia will remain steadfast in upholding the ban on raw material exports. This means that every investor interested in investing in Indonesia’s mineral sector must invest in domestic processing operations. In other words, US companies wishing to access Indonesia’s critical minerals, including rare earth elements, must establish processing facilities in Indonesia.
“As long as the rule is applied that if they want to enter, they must invest in processing. Because our country is prohibited by law from exporting its raw materials. There is a process, downstream processing, investment, they can enter,” Todotua stated firmly.
According to the government, this scheme will ensure that the partnership between Indonesia and the US is balanced and mutually beneficial. Indonesia will gain investment in the mineral processing sector, technology transfer, job creation, and increased state revenue. Meanwhile, the US will secure stable and sustainable access to critical minerals essential for its industries, particularly in high-tech development and clean energy.
Todotua emphasised that trade relations between Indonesia and the US, including in the mineral sector, must be based on sound business principles and mutual benefit. “It’s just normal business to business, really,” he explained. This statement highlights that the government does not grant special treatment to US companies, but instead applies the same rules to all foreign investors wishing to invest in Indonesia’s mineral sector.
The Indonesian government has set ambitious investment realisation targets annually and is promoting the development of priority sectors based on downstream processing. These targets reflect the government’s commitment to increasing investment, creating employment, and fostering sustainable economic growth.
Overall, domestic capital investment is targeted to reach Rp13 trillion over the next five years. This target is a significant challenge, but the government is optimistic about achieving it through various efforts, including investment policy reforms, aggressive investment promotion, and adequate infrastructure development.
“We have a large investment plan. There are investment targets we must achieve each year. There are priority sectors we are promoting, particularly regarding the downstream concept,” said Todotua. The downstream concept refers to industrial downstream activity, namely processing raw materials into high-value-added products.
The downstream processing policy forms part of Indonesia’s broader strategy to become an independent, advanced industrial nation with global competitiveness. By processing its own natural resources, Indonesia can create more employment opportunities, increase state revenue, and reduce dependence on imports.
Indonesia’s downstream processing policy has significant implications for trade relations between Indonesia and the US, particularly in the mineral sector. The policy compels US companies wishing to access Indonesia’s critical minerals to invest in domestic processing sectors. This can increase US investment in Indonesia, create employment, and enhance technology transfer.
However, the policy may also present certain challenges. US companies may be reluctant to invest in Indonesia’s processing sector if they believe investment costs are too high or investment risks are too significant. Additionally, the policy could trigger trade tensions between Indonesia and the US if the US perceives it as discriminatory or obstructive to their access to critical minerals.
Downstream processing represents a promising strategy for increasing the added value of Indonesia’s natural resources and driving sustainable economic growth. However, implementing downstream processing policy also faces various challenges, including:
Infrastructure Limitations: Adequate infrastructure, such as roads, ports, and electricity, is essential to support downstream processing activities. Infrastructure limitations in certain Indonesian regions can hinder the development of downstream industries.
Energy Availability: Processing industries require a stable and affordable energy supply. Indonesia’s dependence on fossil fuels and fluctuating energy prices can be a constraint for downstream industry development.
Workforce Skills: Downstream processing industries require skilled labour to operate sophisticated processing equipment and manage complex industrial operations.