Testing Downstream Processing (4): Projects Stalled—Who Is Responsible?
Processing raw materials into finished goods can increase economic value added. However, the success of downstream processing cannot be measured solely by the scale of investment or groundbreaking ceremonies. Factories must be completed and actually start production.
Industrial development is a lengthy process, involving permits, land provision, electricity, logistics infrastructure and funding certainty. When a project stalls, who is responsible?
The government appointed Bahlil Lahadalia as Coordinating Minister for Downstreaming and Energy Transition on 1 October 2026. His role is to coordinate cross-ministerial policies to accelerate downstream processing and the energy transition. As of 7 October 2026, details of the ministries under his coordination were still awaiting a presidential regulation.
Bahlil stressed that downstream processing and the energy transition “cannot be carried out in a piecemeal way, but must be approached comprehensively and in a measurable manner”.
“We must be able to consolidate this through the Coordinating Ministry so that implementation can be accelerated going forward,” he said on the sidelines of the 2026 Investor Daily Summit.
The division of responsibilities is important. The Energy and Mineral Resources Ministry handles mining and energy supply; the Industry Ministry develops industry; and the Investment and Downstreaming Ministry/Investment Coordinating Board (BKPM) facilitates permits and monitors investment. Regional governments exercise their respective powers, while investors and project operators are responsible for carrying out construction.
Obstacles can arise at various stages, from permits and land acquisition to financing, electricity supply and logistics infrastructure. The coordinating ministry is responsible for aligning policies and coordinating solutions to cross-sector problems, while the relevant agencies must still fulfil their duties and companies must meet their contractual obligations.
Indef executive director Esther Sri Astuti said that reforms to permits, legal certainty and infrastructure development were important to strengthening investment.
Investment and Downstreaming Minister and BKPM head Rosan Perkasa Roeslani made a similar point, saying in August 2026, while outlining investment programmes, that his ministry “wants to provide greater certainty over permits”.
Large Investment Does Not Guarantee a Factory Will Operate
The national investment target for 2026 is Rp 2,041.3 trillion. In the first half of the year, realised investment stood at Rp 1,010.6 trillion, including Rp 300.1 trillion in downstream-processing sectors.
Those figures, however, do not show how many projects have been completed or how much production capacity is actually operational.
At the Weda Bay industrial area in North Maluku, of 11 projects worth around Rp 180 trillion launched on 8 October 2026, four have reached the commercial stage, while the other seven have only begun construction.
The four projects are worth around Rp 60 trillion and include a battery-cell factory with an annual capacity of 8 gigawatt-hours (GWh). That figure represents production capacity, not the number of batteries already produced.
Downstream-processing projects should therefore be assessed by comparing investment values with funds actually invested, construction progress, installed capacity, production volumes and operating schedules. Every delay should be accompanied by an explanation of its cause, the party responsible and a deadline for completion.
Oversight of funding is also important. In June 2026, Danantara asked the Corruption Eradication Commission (KPK) to provide assistance on downstream-processing projects.
“We do not want these projects to carry the potential for corruption in their execution,” said Danantara chief operating officer Dony Oskaria.
If electricity supply is unavailable, energy providers and the relevant agencies must prepare a solution. If permits are delayed, the competent authorities must resolve the issue. Investors or contractors that fail to meet their obligations, meanwhile, must face consequences under their contracts and the law.
The coordinating ministry’s role is to align policies and resolve cross-sector obstacles, not to take over the responsibilities of individual agencies or replace investors’ obligations.
Success Is Not Measured by Investment Alone
The success of downstream processing should be measured by factories in operation, jobs created and economic benefits felt by the public. The scale of investment is only one indicator in the process.
This issue matters for the nickel and electric-vehicle industries. Indonesia has abundant nickel resources and continues to develop processing facilities and battery factories. But does industrial development automatically make electric cars and motorbikes more affordable for the public?
That question is the focus of Testing Downstream Processing (5): Abundant Nickel—Why Are Electric Vehicles Still So Expensive?