Indonesia's Downstream Policy Is Too Focused On The Midstream Sector

Illustration (Photo: Doc. ANTARA)

JAKARTA - Deputy Director of the Institute for Economic and Community Research, Faculty of Economics and Business, University of Indonesia (LPEM FEB UI) Jahen Fachrul Rezki assessed that the downstream policy implemented by the Indonesian government was still too focused on the midstream sector.

Meanwhile, he continued, the upstream sector has not received optimal attention.

"We are still very focused on development in the midstream. So the increase in the number of smelters, the increase in processing in midstream, but we haven't evaluated or seen more deeply about the conditions on the upstream," said Jahen as quoted by ANTARA, Wednesday, January 22.

According to Jahen, evaluation in the upstream sector is very important to ensure the sustainability of Indonesia's mineral reserves in the long term.

Lack of attention to the exploration and management of the upstream sector can pose a risk in the form of depletion of important mineral reserves.

This can also have an impact on the effectiveness of downstream policies in the long term.

In addition, Jahen assessed that the lack of national strategies related to the readiness of the downstream sector to absorb the products of mineral processing in the domestic market was a challenge in itself.

"Indeed, the government may need to increase its attention to the potential that we have in the upstream sector, and we will also not live forever there will be grandchildren who also need to benefit from this policy.

In the report issued by the US-ASEAN Business Council (USABC) together with the LPEM FEB UI, Jahen also highlighted the dominance of large companies in the construction of large-scale smelter facilities.

In the future, the government needs to encourage the participation of small and medium-sized companies to MSMEs in downstreaming policies.

This is important to ensure that the benefits of downstreaming are felt more broadly.

In addition, the mechanism for collaboration with the private sector also needs to be strengthened to overcome government limitations in terms of funding, supply chains, and technical capacity.

In the event, Jahen gave a number of recommendations for optimizing downstream policies, among others, to increase focus on the upstream sector to ensure the sustainability of mineral reserves in the long term.

Second, developing a comprehensive roadmap related to the readiness of downstreaming of each mineral commodity.

Third, encourage the participation of MSMEs and small-medium companies in supporting the implementation of downstreaming.

Fourth, strengthen downstream industries by ensuring that mineral processing results can be optimally absorbed in the domestic market.