Investment and Downstreaming to Become New Engines of Indonesia's Economic Growth
Indonesia is entering a crucial phase in its economic development journey. While household consumption has long been a primary pillar of growth, investment is now demonstrating an increasingly strategic role as a new engine to strengthen the national economic foundation. Sustained investment growth presents opportunities for job creation, the strengthening of domestic industries, increased productivity, and the formation of new, more sustainable growth sources.
The Ministry of Investment and Downstreaming/Investment Coordinating Board (BKPM) holds a vital position in ensuring this momentum does not stop at investment realisation figures. Simplifying licensing services, increasing legal certainty, and facilitating the resolution of various investment hurdles, or debottlenecking, are essential parts of the effort to create a more competitive business climate. Investment will only yield maximum impact if planned projects can be realised promptly and operated optimally so that the economic benefits can be felt by the community.
The Minister of Investment and Downstreaming/Head of BKPM, Rosan Roeslani, emphasised the importance of collaboration between the central government, regional governments, ministries, agencies, and various stakeholders in overseeing investment implementation. This view suggests that investment can no longer be treated merely as an administrative licensing matter. Successful investment requires an integrated ecosystem, ranging from regulatory certainty, availability of land and infrastructure, workforce readiness, and energy access to market certainty.
These challenges are increasingly relevant as global investment trends undergo shifts. International capital is now increasingly attracted to strategic sectors expected to determine future economic structures. Digital infrastructure, artificial intelligence, clean energy, advanced manufacturing, technology, innovation, and critical minerals are becoming increasingly important sectors. Rosan Roelyani noted that the next stage of Indonesia’s downstreaming will no longer focus solely on minerals and their processing, but will move towards digital infrastructure, technology, innovation, and future industries.
Indonesia must take this shift in direction seriously. While natural resource advantages are an important asset, they are insufficient to guarantee long-term competitiveness. Indonesia needs to transition from being a mere supplier of raw materials to a nation capable of producing high-value-added products, mastering technology, developing human resources, and building strong domestic supply chains. In doing so, investment will not only enter Indonesia but will also take root and grow alongside national industries.
This is where the role of Danantara can become increasingly strategic. The Deputy Chairman of the Permanent Committee for Renewable Energy Development Planning of the Indonesian Chamber of Commerce and Industry (Kadin), Feiral Rizky Batubara, assessed that Danantara could act as an anchor investor in large-scale projects. This position could open space for long-term collaboration with national companies through joint venture schemes, co-investment, the provision of goods and services, and the involvement of domestic companies in the supply chain.
Large-scale investments must have strong links to domestic industries to create a multiplier effect for local suppliers, SMEs, workers, and supporting industries. This momentum is already visible from 19 downstreaming projects that have undergone groundbreaking with a value of approximately Rp225 trillion. These projects cover the mineral, energy, and agricultural sectors. The presence of these projects demonstrates that the downstreaming strategy is moving from concept to implementation.
From a macroeconomic perspective, the role of investment is becoming increasingly evident. Investment grew by 6.87 per cent in the second quarter of 2026, higher than the growth of household consumption, which reached 5.06 per cent. During the same period, the downstreaming sector grew by 6.9 per cent. Meanwhile, investment realisation in the first half of 2026 reached Rp1,010.6 trillion, with the absorption of 1.45 million direct workers, an increase of 15 per cent. These figures demonstrate that investment has become a key driver of national economic activity.
Senior Economist Didik J. Rachbini also assessed that improving the investment climate could be one of the factors that strengthen the foundation of the Rupiah’s exchange rate in the long term, especially when monetary policy space faces various structural issues. Foreign investment inflows can serve as a source of foreign exchange that strengthens Indonesia’s external sector. Therefore, increasing Indonesia’s attractiveness as an investment destination is not only related to economic growth but also to national economic resilience.
Moving forward, licensing reforms must continue, legal certainty needs to be strengthened, and central-regional coordination must become more effective. At the same time, national companies must be prepared to become primary partners in various strategic projects. If incoming capital can meet the capacity of domestic industry, investment will produce a much larger chain effect.
Making investment a new engine of growth involves transforming capital into productivity, jobs, technology, value addition, and competitiveness. Indonesia possesses a large market, abundant natural resources, and a strategic position in the regional economy. With an increasingly certain investment climate and the right downstreaming strategy, this capital can be converted into a new economic force. Quality investment will serve as the foundation for Indonesia’s stronger, more inclusive, and sustainable growth.