"The only way to escape from the middle-income trap is by strengthening our products downstreaming," Lahadalia, who is also head of the Investment Coordinating Board (BKPM), emphasized at an online seminar on “Indonesia's Prospects in Economic Recovery Amid Post-Pandemic Geopolitical Changes,” which was followed from Jakarta on Wednesday.
He recalled how at the time of his appointment as head of BKPM in 2019, President Joko Widodo (Jokowi) had ordered him to stop exports of nickel ore. The move was protested by entrepreneurs for the next 1.5 months.
However, the policy to stop nickel ore exports paid off because the downstream industry that used nickel as raw material was able to boost export performance to provide positive added value to the country.
Nickel downstreaming is also projected to help Indonesia become one of the biggest players in the cell battery industry for electric vehicles.
"We have built an electric vehicle ecosystem and battery cells in Indonesia," the minister noted.
So far, Indonesia has succeeded in attracting investment for the development of global electric vehicle batteries from LG (South Korea), CATL (China), Foxconn (Taiwan), and VW and BASF (Germany).
The minister said that this year, the government will arrange exports of raw bauxite and tin. It will also build a downstream industry for the two minerals in the country to domestically absorb their added value.
"We will no longer export raw bauxite and tin. We are the second largest tin producer in the world, with China on number one. China has 80 percent built their own downstreaming industry, while Indonesia has only built 5 percent. We are one of the biggest tin exporters in the world but we let other countries mark up the price," he added.
Lahadalia said he hopes that all efforts made by the government to encourage the downstream industry will support the welfare of the people, which is an investment objective.
"We hope that the downstreaming industry would bring added value to create more job opportunities with a higher salary," he added.
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