Indonesia aims to achieve advanced nation status by 2045, requiring a sustained annual economic growth of 6-7%. To accelerate economic growth, the government is prioritizing downstreaming initiatives in the food and mineral sectors, known as hilirisasi. Downstreaming involves transforming raw materials into high-value-added products, enhancing their marketability and export potential. In food downstreaming, seven main commodities including rice, various chili peppers, onions, fisheries, sugar, crude palm oil (CPO), and seaweed are targeted. Similarly, mineral and coal downstreaming focuses on Indonesia's key metals such as nickel, bauxite, copper, and tin. These initiatives aim to elevate domestic commodities into higher-value products for export, thereby increasing Indonesia's economic revenue. Additionally, they promote inclusive growth by generating more job opportunities. Under President Joko Widodo's administration, Indonesia is intensifying downstreaming efforts to penetrate global export markets while dominating the domestic market. The ultimate goal is to elevate Indonesia's GDP to USD 9-11 trillion by 2045, with a targeted per capita income ranging from USD 21,000 to USD 29,000.
According to the Institute For Development of Economics and Finance (Indef), industrial downstreaming will boost export values, significantly contributing to national revenue alongside taxes and duties. For mining and mineral-based industries, nickel smelters are being constructed to process nickel ore into downstream products like stainless steel, electric batteries, and kitchen equipment. Indonesia currently has 38 operational nickel smelters, with significant investments totaling USD 15.8 billion. Mineral and coal downstreaming has significantly increased Indonesia's national export value, reaching USD 36.4 billion by October 2022, marking a 40% increase compared to 2021. Similarly, the export value of palm oil and its derivatives reached USD 41.32 billion in 2022. The government's downstreaming policy has attracted substantial investments, with realized investments in downstreaming reaching IDR 375.4 trillion in 2023. To become an advanced nation, downstreaming investments totaling USD 545.3 billion are required for 21 commodities across eight priority sectors. Downstreaming programs not only enhance export profits but also drive infrastructure development in the manufacturing sector, further boosting economic growth. Through consistent downstreaming efforts, Indonesia aims to maximize its benefits and contributions towards achieving its aspiration of becoming an advanced nation by 2045.
