Faisal Basri: Downstreaming Nickel Industry Such As Manufacturing Electric Vehicle Batteries Only Profits China

Indef's senior economist, Faisal Basri. (Photo: Doc. Kemenkominfo)

JAKARTA - The government continues to encourage industrial downstreaming to accelerate economic transformation. All existing commodities are encouraged for downstreaming, one of which is nickel.

But unfortunately, senior economist at the University of Indonesia (UI), Faisal Basri, assesses that the government's efforts to encourage downstream nickel industry are still not running optimally and actually benefit the other party, namely China.

Faisal said that Indonesia's nickel reserves, which are relatively large, have not yet had an impact on the national economy. In fact, there are still many shortcomings in the nickel industry downstream roadmap.

"Downstreaming aims to increase national added value, most of which are ferronickel and nickel pig iron (NPI) whose added value is still very low at around 25 percent," he said in a virtual discussion, Tuesday, October 13.

According to Faisal, the downstreaming carried out by the government by building batteries for electric cars, even producing cars in Indonesia ultimately only supports industrialization in China. Faisal said that it was not Indonesia, but China that benefited greatly from downstreaming the nickel industry.

"Downstreaming is limited to processing raw materials, which so far has only been 25 percent. It is predicted that it will produce batteries for electric cars, even electric cars will be produced. Indonesia is great. It doesn't matter if the downstream products will be exported in vain. Especially to China," he said.

"So downstream to support industrialization in China and provide the highest profit for them," he continued.

In addition, Faisal said that investors from China will also benefit greatly by investing in Indonesia. Because, they get nickel at a low price.

Referring to existing data, in the first semester of 2021, the price of nickel graded at 1.8 percent in the Shanghai Metal Market (SMM) is pegged at 79.61 US dollars per tonne. However, the price of HPM did not reach half or was only in the range of US$38.19 per ton.

According to Faisal, the application of prices does not have to be the same as international prices. Even so, at least the government needs to adjust the price at least in the range of 50 to 60 dollars per ton.

"If we do the calculations, the government deliberately sets a low price so that the government can get a small portion of PNBP," he said.