Former Trade Minister Lutfi Tells The Story Of The Success Of Downstreaming Indonesia, China-Europe To Ketar-ketir

Illustration (doc. Antara)

JAKARTA - Former Minister of Trade (Mendag) Muhammad Lutfi told the story of the downstream health center carried out by the Indonesian government to make developed countries ketar ketir.

Lutfi said downstreaming was proven to be able to increase the added value of Indonesia's non-oil and gas exports. In fact, Indonesia was banned by Europe and China due to the rapid development of exports.

Before December 2019, said Lutfi, Indonesia only exported nickel ore ore. The raw material was sold to China for 20 US dollars per ton or equivalent to Rp316,460 (assuming an exchange rate of Rp15,823 per US dollar). The raw goods were then bought by Indonesia again into finished goods.

"This has become a story from the Dutch colonial era, it never ends until Indonesia is independent," said Lutfi in a statement, Thursday, February 1.

Not only nickel, but Indonesian bauxite has also been excavated by Japan because it has a concession since 1980. Japan dug up Kijang Island in the Riau Islands until it almost sank.

Nickel and bauxite are processed by countries that have technology for raw materials for finished products, one of which is vehicles. Later, he said, these products will enter Indonesia through complete imports and are assembled in Indonesia or completely knocked down (CKD).

In December 2019, Lutfi continued, President Joko Widodo began banning exports of nickel ore. Investment Minister/Head of the Investment Coordinating Board (BKPM) Bahlil Lahadalia dismissed the export.

Pascalarangan, he continued, the value of Indonesia's exports skyrocketed. China then implemented a policy of import duties for security measures (BMTP) or safeguards with a 20% penalty since the end of 2020. Panda Country has done this so that its non-financial steel industry is not destroyed because of Indonesia.

"The trade balance in December 2019 is our nickel-based export ore of 1.1 billion US dollars (equivalent to Rp. 17.4 trillion). This is not yet a battery. In January 2020 we will see how many exports we are based on nickel that have been processed into stainless steel. The jump rate is 10.86 billion US dollars (equivalent to Rp. 171.8 trillion). There are 11 added value, exports again to China 69 percent. Then, the most competitive Chinese industry in the world lost to Indonesia, given a barrier (20 percent tariff limit), "said Luthfi.

Luthfi, who was then the minister of trade for the 2020-2022 period, was worried that the policy would reduce Indonesia's exports. However, Indonesia's trade balance with China still recorded positive results for Indonesian exports where non-strict steel shipments grew almost twice.

Apart from China, Europe is also trying to prevent Indonesia's export growth, saying that Indonesia's downstream program is not environmentally friendly. Therefore, the former Head of the Investment Coordinating Board for the 2005-2009 period said that Indonesia is fighting the discriminatory policy through the World Trade Organization (WTO).

Lutfi also strongly supports downstreaming that the government wants to boost in the future. According to him, Indonesia has enormous potential to become a country with a strong economy. He also wants Indonesia to become an industrialized country, which is the key to getting out of the trap of middle-income countries.

"We have a deadline, if we don't industrialize, are late and don't implement it today, then we can't get out of the middle-income trap in 2038-2040, we will finish," said the former Indonesian Ambassador to the United States.

On the other hand, the General Chairperson of the Repnas Anggawira stated that downstreaming is a way for Indonesia to advance to become a developed country. So, regardless of who will win the 2024 presidential election, the elected president must continue the downstream policy.

In line with Lutfi's presentation, the man who also serves as Secretary General of the Indonesian Young Entrepreneurs Association (HIPMI) said that downstreaming has increased Indonesia's bargaining power in the global arena. As a result, this country is increasingly difficult to suppress by other countries.

"The downstream nickel has an impact on our economic growth. So President Jokowi's downstream program must be continued," said Anggawira.

As the world's largest nickel producing country, Anggawira assesses that Indonesia has the opportunity to become an important player in the global supply chain. "This is a great potential for the manufacture of electric cars made by Indonesia itself. If it is not processed, it will become a country that is like this, does not advance and does not progress," he said.

The downstream program of President Jokowi on a number of occasions has been promised to be continued by presidential and vice presidential candidate pair number 2, Prabowo Subianto and Gibran Rakabuming Raka. The program was also welcomed by entrepreneurs in the country.