SOEs Intensively Conduct Downstreaming, Erick Thohir: Opens Investment Opportunities

Minister of SOEs, Erick Thohir. (Photo: Doc. Ministry of SOEs)

JAKARTA - The government through the Ministry of State-Owned Enterprises (BUMN) is aggressively downstreaming natural resources (SDA). The aim is to reduce Indonesia's import dependence on foreign products. SOE Minister Erick Thohir said downstreaming could also open up investment opportunities.

Erick revealed the various benefits obtained from downstreaming. For example, processing coal into finished goods and semi-finished goods. With the processing of raw materials, it will increase the value of post-processing products.

That way, continued Erick, Indonesia's profits will also increase. Meanwhile, on the other hand this also brings a sustainable and related effect.

"In addition to creating added value for the product, the multiplier effect will create various other business opportunities, bringing in investment, absorbing large numbers of workers, so that ultimately it will improve people's living standards," Erick said, quoted from his official Instagram account @erickthohir, Wednesday, February 23.

So far, natural resources in Indonesia are often exported in the condition of raw materials. Meanwhile, the processing is carried out abroad, then the finished goods will be imported to Indonesia. Therefore, said Erick, downstreaming will reduce Indonesia's import dependence on foreign products.

"Downstreaming of natural resources is very important to realize a more independent Indonesia. Because it reduces dependence on imported products. With downstreaming, we no longer need to export raw materials but semi-finished or finished goods," he said.

According to Erick, SOEs have a role in this downstreaming. An example is through a joint venture for an electric battery factory and coal gasification.

"Together with the state-owned mining industry holding, we have carried out downstream initiatives, including the construction of a smelter, the formation of the Indonesia Battery Corporation (IBC) and the gasification of coal into Dimethyl Ether (DME)," he said.

In the video uploaded on his Instagram, Erick gives a number of examples of downstreaming. An example is the processing of raw materials by two state-owned companies. SOEs take a role in initiating the downstreaming of raw materials

"There are so many things that we are now pushing for how PT Freeport builds a smelter, PT Timah will build a smelter as well," he said.

Then, continued Erick, the state-owned company also started the lisization of coal as a substitute for LPG or LPG.

"Our aluminum can be processed into alumina. So the tree derivatives can be seen, this is what we were pushing so that we can be more competitive," he explained.