The Indonesian government is increasingly aggressive in accelerating industrial downstreaming as an effort to strengthen national energy security, create new jobs, and drive sustainable economic growth. In a meeting chaired by President Prabowo Subianto at Merdeka Palace, Jakarta, on March 3, 2025, it was agreed that 21 first phase downstream projects would be realized immediately. With a total investment of US$40 billion, these projects are part of the national downstream investment target projected to reach US$618 billion by 2025.
Minister of Energy and Mineral Resources (ESDM), Bahlil Lahadalia, stated that the agreed projects cover various strategic sectors that have a significant impact on the national economy. During the meeting, the government discussed in depth the various projects that will be executed immediately to ensure that the downstream industry runs optimally. With this massive investment, Indonesia is expected to reduce dependence on imported products and increase added value to domestic natural resources.
Hilirization Focus on Energy, Mining, and Agriculture Sector
The government’s downstream industry includes several key sectors that play a crucial role in the national economy. One of the flagship projects is the construction of an oil storage facility on Nipah Island that aims to improve national energy security. In addition, the government will also build an oil refinery with a capacity of 500,000 barrels per day designed to reduce dependence on crude oil imports and ensure energy availability for domestic industries.
In the coal gasification sector, the government targets the production of Dimethyl Ether (DME) as an alternative substitute for LPG to reduce dependence on imported fuel. The project will optimally utilize domestic resources without relying on foreign investment. DME development will be focused in several strategic areas such as South Sumatra, East Kalimantan, and South Kalimantan to ensure more equitable energy distribution. In addition, the government will also accelerate the downstreaming of the mining sector by encouraging the processing of copper, nickel, and bauxite into value-added products such as alumina.
President Prabowo has set 26 commodity sectors as national downstream priorities, including the mineral industry, oil and gas, fisheries, agriculture, plantations, and forestry. This step is believed to accelerate the transformation of Indonesia’s economy towards a natural resource-based industrialized country that has the power to transform its economy.
Impact of Downstream Investment for Foreign Investors in Bali and Eastern Indonesia
This large investment in downstream industrial projects is predicted to have a significant impact on foreign investors, especially in Bali and Eastern Indonesia. With the development of energy and industrial infrastructure, foreign investors will be increasingly interested in investing their capital in various developing sectors. The downstreaming of mining and energy will create new supply chains that open up investment opportunities in manufacturing, logistics services, and other supporting industries.
In Bali, the growth of the green industry sector driven by downstreaming will open up opportunities for investors in the development of renewable energy, ecotourism, and sustainability-based property sectors. Meanwhile, in Eastern Indonesia, downstream projects can increase the economic value of abundant natural resources, encouraging investors to participate in locally-based processing industries. With conducive policy support, increasingly transparent regulations, and attractive fiscal incentives, the government is optimistic that these projects will strengthen Indonesia’s position as a competitive investment destination in the Asia-Pacific region.
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