Will the man who succeeds Indonesia President Jokowi continue his signature industrial downstreaming policy?

Jokowi called for his successor to continue commodity downstreaming in August.

Keyla Supharta | December 11, 2023, 10:40 PM



The Indonesia presidential hopefuls continue to unveil their plans for the nation, as the country gears up for the presidential election on Feb. 14, 2024.

With the three presidential candidates attempting to woo voters, many are scrutinising whether they will continue the policies laid down by their popular predecessor, President Joko "Jokowi" Widodo.

Jokowi, who is set to leave office in Oct. 2024, enjoys a 76 per cent approval rate, as indicated by a recent survey conducted by the Indonesian Survey Institute.

With presidential campaigns underway, Jokowi's industry strategy of "downstreaming" has gained the spotlight in recent days.

This was discussed in further depth at the Centre for Strategic and International Studies (CSIS) last Wednesday (Dec. 6) in Jakarta, with speakers from each of the candidates' campaign teams sharing their take on industrial downstreaming, Jakarta Post reported.

What is downstreaming?

Industrial downstreaming refers to the process of turning raw materials into products of higher value, instead of exporting them in their raw form.

Jokowi said that the "commodity downstreaming" policy was the foundation of Indonesia's goal to become one of the world's biggest economies by 2045.

In August, Jokowi called for his successor to continue commodity downstreaming, Reuters reported.

"Unsynchronised with reality"

The discussion on Dec. 6 revealed that former Central Java governor Ganjar Pranowo and defence minister Prabowo Subianto intend to continue Jokowi's downstreaming policy should they be elected.

However, former Jakarta governor Anies Baswedan intends to call for a re-evaluation of the policy.

Anies campaign spokesperson Thomas Lembong emphasised there was an "urgent need" for the government to re-evaluate their trade and mining policies.

Thomas argued that a more extensive and comprehensive approach to downstreaming must be taken, saying the current policies are too wrongfully focused on nickel and out-of-touch with market demands.

"The current scheme is not market-friendly and unsynchronised with reality," he said, referring to the government's export bans on certain commodities, including raw nickel.

Thomas further accused the government of being "narrow-minded", arguing that manufacturers could turn to nickel substitutes and other strategic commodities such as cement, steel, petrochemicals and fertilisers should also be prioritised.

Still in early stages of downstreaming

Prabowo's spokesperson, Drajad H. Wibowo, countered the accusation of the downstreaming policy being "narrow-minded", saying that the sentiment did not take into account that the nation was still in the early stages of downstreaming.

Drajad said that other commodities will also experience the same treatment in the future.

Despite criticism of the policy, Drajad noted that the downstreaming policy had been crucial in ensuring Indonesia's trade surplus, citing that the export value of nickel had increased from US$3 billion (S$4 billion) in 2019 to US$33 billion (S$44.3 billion) in 2022.

Key to Indonesia's long-term vision

Ganjar’s campaign team spokesperson Heru Dewanto stressed the importance of continuing the downstreaming policy, adding that the scheme was key to Indonesia's long-term vision.

Heru said that Ganjar would even seek to expedite the process, so that Indonesia could industrialise its economy.

Heru added that Ganjar's running mate, Coordinating Minister for Political, Legal, and Security Affairs, Mahfud MD, will be able to play a significant role in establishing a strong legal framework to assist the plan.

Climate concern

Despite differing takes on Indonesia's downstreaming policy, the three presidential campaign teams agree on the importance of ensuring more environmentally-friendly management.

According to the Jakarta Post, analysts observed a rapid increase in Indonesia's carbon emissions over the years following a surge in coal consumption from the metallurgical sector.

This posed an environmental dilemma to the use of coal in downstream industries.

Addressing the environmental dilemma

In response to the climate dilemma, Heru from Ganjar's campaign team said the country should employ new, more environmentally-friendly technologies to downstream nickel.

“If we are serious about optimising nickel, this is our chance since we have the comparative advantage. [The task] is to be brave and acquire eco-friendly technology to become a technology leader,” he said, as quoted by Jakarta Post.

Meanwhile, Drajad said that Prabowo would use carbon capture and storage technology to decrease emissions from coal-fired power plants.

Drajad also stressed the importance of forest management certification to access the international market.

On the other hand, Thomas from Anies' campaign team criticised the use of coal-fired power plants for nickel smelters, but reportedly did not offer any environmental solutions.

However, Thomas stressed the importance of a transparent system to reduce greenwashing in the industrial sector.

Top image via Tom Fisk/Pexels