Jakarta’s ‘downstreaming’ policy could backfire

Significance

The policy involves restricting exports of certain raw materials in an attempt to encourage greater value-added processing domestically. The government banned exports of nickel ore in 2020 and now eyes restrictions on shipments of other commodities including bauxite, copper and tin.

Impacts

• New taxes will be imposed on shipments of nickel pig iron and ferronickel in a bid to spur local production of stainless steel.
• Indonesia will count on growing demand for its higher-value processed products domestically as well as overseas.
• Attracting the long-term investment needed to build more smelters will hinge on maintaining political stability.