Economy

Indonesia could export $300 billion in 2024, thanks to resource downstreaming’ By Stocksak


© Stocksak. FILE PHOTO – A truck passes stacks of containers at the Tanjung Priok port near Jakarta, Indonesia, on August 3, 2022. REUTERS/Willy Kurniawan

Gayatri Suroyo and Fransiska Naangoy

JAKARTA, Stocksak – Indonesia’s exports could surpass $280 billion this fiscal year. This is due to nickel-based steel shipments increasing sharply following the ban on nickel ore exports. Meanwhile, shipments of other commodities were boosted by high prices, a senior minister claimed Monday.

The government is preparing to regulate exports of other commodities such as, bauxite and tin to encourage investment in local downstream industry, Luhut Panjaitan, Coordinating Minister of Maritime and Investment Affairs said in an interview.

Southeast Asia’s largest economic sector has enjoyed an export boom lasting more than a decade due to rising commodity costs, which have been exacerbated by war in Ukraine.

Indonesia is the largest exporter of thermal coal, palm oils, refined tin, and a major seller nickel-based steel, copper and other resources.

The government has banned nickel ore exports in 2020. This move has attracted investment into processing facilities, which officials refer to “resource downstreaming”.

Luhut stated that the government was developing a downstreaming plan to create an industry that would process bauxite and copper, tin, and later palm oil into higher-value products. This plan is similar to the success of the nickel export ban.

“Our exports last fiscal year were $232 billion. Maybe $280 billion this year. Stocksak was told by Luhut that he believes we could reach $300 billion by 2024.

“If this (downstreaming), works, by 2024 our economic growth will exponentially be,” he stated, adding that Indonesia’s gross national product could reach $3.5 trillion by 2030. This is almost three times the current $1.19 Trillion in 2021.

He stated that the nickel metals shipment will rise to $30 billion this fiscal year, up from $21 Billion in 2021 and $1.4 Billion in 2015.

Luhut stated that his optimistic outlook takes into account global uncertainties such as the possibility of a drop in commodity prices next year. However, he said that coal and palm oil prices will likely remain stable in 2023.

He also believed that Indonesia would be able to produce electric vehicles batteries by 2024.

Luhut declined to provide details about Indonesia’s possible policy to regulate other commodity exports, saying that authorities were still weighing whether to use tax instruments or a ban to stop exports.

Last week, President Joko Widoso said that the government was still working on a possible ban against tin exports. Authorities were also committed to directing the mining sector towards more domestic processing.

The European Union has made a complaint to the World Trade Organization regarding Indonesia’s ban on nickel ore exports. A dispute panel is expected to release a report in this quarter. Last month, the president said that Indonesia would likely lose the dispute.

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