Steel Takes Centre Stage in Indonesia's Downstreaming Strategy as Investment Surges 152%
Amid the national downstreaming wave spanning nickel, copper and palm oil sectors, steel is beginning to occupy a central position in the growth narrative. During an interactive discussion session at the Indonesia Steel Summit & Exhibition Indonesia (ISSEI) 2025, Dedi Latip, Deputy for Investment Planning at the Ministry of Investment and Downstreaming/BKPM, outlined the government's strategy to position the iron and steel industry as a lever for productivity and high value-added exports.
**Steel Investment Leap**
In line with the government's policy to transform the economy from primary sector industries to value-added downstream industries, investment flowing into the basic metals, metal goods (excluding machinery and equipment) sector increased by 152 per cent, from Rp94.6 trillion in 2020 to Rp238.4 trillion in 2024.
"Iron and steel is one of eleven nationally prioritised commodities in the strategic downstreaming agenda. This is not merely a construction material — it is the foundation of industrialisation," Dedi affirmed.
**Meeting Ambitious Targets**
President Prabowo Subianto's target is economic growth of 8 per cent per annum during the 2025–2029 period. Achieving this requires investment worth Rp13,032 trillion, with the private sector accounting for 86.6 per cent. BKPM projects the basic metals sector, including iron and steel, will be a key pillar, with national consumption forecast to surge to 100 million tonnes per year by 2045.
In the discussion moderated by Akbar Djohan, President Director of PT Krakatau Steel (Persero) Tbk, BKPM also stated it had drawn up a Steel Downstreaming Roadmap 2023–2029, setting production capacity and expansion targets from upstream (billet, slab) to downstream (plate, HRC, pipe, wire mesh).
Several achievements have exceeded first-phase targets: steel plate reached 312.8 per cent of target, steel slab 215 per cent, and steel HRC 391 per cent. However, downstream products such as wire mesh and coated steel remain below target and require further investment support.
**Regulatory Harmonisation and Deemed Approval**
Recognising that licensing remains a persistent obstacle for industry players, the government through Law No. 6/2023 and Government Regulation 5/2021 introduced the concept of deemed approval (fiktif positif), whereby if a permit application is not processed within a specified timeframe, it is considered legally approved.
"We must not impede investment with layer upon layer of administrative procedures. Now, if all requirements are complete, permits are automatically issued through the OSS system," Dedi explained.
BKPM now holds the authority to issue permits across 16 priority sectors through the risk-based OSS single-window system. Risk classification ranges from low (requiring only a Business Identification Number) to high (requiring a verified business licence in addition to the identification number).
**Incentives and Special Economic Zones for Steel**
To drive deeper investment in the sector, BKPM has prepared fiscal incentives including tax holidays, tax allowances and raw material master lists. Additionally, the development of 25 Special Economic Zones (KEK) and more than 160 industrial estates across Indonesia serves as a crucial vehicle for distributing iron and steel investment beyond Java.
The government is also focused on active promotion. Through investment forums such as those in Davos, the G20 and Regional Investment Forums, BKPM identifies global companies possessing advanced technology in the steel downstreaming sector for potential partnerships with state-owned enterprises and domestic players.
**Challenge: Trade Balance Still in Deficit**
Despite rising investment and production capacity, the iron and steel trade balance remains in deficit. National steel exports throughout 2023 totalled only US$2.99 billion, whilst imports reached US$9.19 billion. This indicates that increased capacity has not yet been fully monetised into high-value downstream export products.
Dedi emphasised the importance of support from end-user sectors — from automotive and maritime to defence — to absorb domestically produced steel. This is where cross-sectoral collaboration, such as that fostered through ISSEI 2025, becomes crucial.
ISSEI 2025, held over two days at the Jakarta Convention Center, was a collaborative effort between IISIA and SEAISI, featuring more than 150 exhibitors and thousands of industry stakeholders. This year, ISSEI embraced the theme "National Steel, Regional Competitiveness" as a strategic platform bringing together regulators, investors and end-user industries to chart a collaborative roadmap towards Golden Indonesia 2045.
**Steel Investment Leap**
In line with the government's policy to transform the economy from primary sector industries to value-added downstream industries, investment flowing into the basic metals, metal goods (excluding machinery and equipment) sector increased by 152 per cent, from Rp94.6 trillion in 2020 to Rp238.4 trillion in 2024.
"Iron and steel is one of eleven nationally prioritised commodities in the strategic downstreaming agenda. This is not merely a construction material — it is the foundation of industrialisation," Dedi affirmed.
**Meeting Ambitious Targets**
President Prabowo Subianto's target is economic growth of 8 per cent per annum during the 2025–2029 period. Achieving this requires investment worth Rp13,032 trillion, with the private sector accounting for 86.6 per cent. BKPM projects the basic metals sector, including iron and steel, will be a key pillar, with national consumption forecast to surge to 100 million tonnes per year by 2045.
In the discussion moderated by Akbar Djohan, President Director of PT Krakatau Steel (Persero) Tbk, BKPM also stated it had drawn up a Steel Downstreaming Roadmap 2023–2029, setting production capacity and expansion targets from upstream (billet, slab) to downstream (plate, HRC, pipe, wire mesh).
Several achievements have exceeded first-phase targets: steel plate reached 312.8 per cent of target, steel slab 215 per cent, and steel HRC 391 per cent. However, downstream products such as wire mesh and coated steel remain below target and require further investment support.
**Regulatory Harmonisation and Deemed Approval**
Recognising that licensing remains a persistent obstacle for industry players, the government through Law No. 6/2023 and Government Regulation 5/2021 introduced the concept of deemed approval (fiktif positif), whereby if a permit application is not processed within a specified timeframe, it is considered legally approved.
"We must not impede investment with layer upon layer of administrative procedures. Now, if all requirements are complete, permits are automatically issued through the OSS system," Dedi explained.
BKPM now holds the authority to issue permits across 16 priority sectors through the risk-based OSS single-window system. Risk classification ranges from low (requiring only a Business Identification Number) to high (requiring a verified business licence in addition to the identification number).
**Incentives and Special Economic Zones for Steel**
To drive deeper investment in the sector, BKPM has prepared fiscal incentives including tax holidays, tax allowances and raw material master lists. Additionally, the development of 25 Special Economic Zones (KEK) and more than 160 industrial estates across Indonesia serves as a crucial vehicle for distributing iron and steel investment beyond Java.
The government is also focused on active promotion. Through investment forums such as those in Davos, the G20 and Regional Investment Forums, BKPM identifies global companies possessing advanced technology in the steel downstreaming sector for potential partnerships with state-owned enterprises and domestic players.
**Challenge: Trade Balance Still in Deficit**
Despite rising investment and production capacity, the iron and steel trade balance remains in deficit. National steel exports throughout 2023 totalled only US$2.99 billion, whilst imports reached US$9.19 billion. This indicates that increased capacity has not yet been fully monetised into high-value downstream export products.
Dedi emphasised the importance of support from end-user sectors — from automotive and maritime to defence — to absorb domestically produced steel. This is where cross-sectoral collaboration, such as that fostered through ISSEI 2025, becomes crucial.
ISSEI 2025, held over two days at the Jakarta Convention Center, was a collaborative effort between IISIA and SEAISI, featuring more than 150 exhibitors and thousands of industry stakeholders. This year, ISSEI embraced the theme "National Steel, Regional Competitiveness" as a strategic platform bringing together regulators, investors and end-user industries to chart a collaborative roadmap towards Golden Indonesia 2045.