Jayanty Nada Shofa, Jakarta – Presidential hopeful Prabowo Subianto said Friday that Indonesia could achieve double-digit economic growth if its strategy of processing natural resources at home goes according to plan.
President Joko "Jokowi" Widodo has been pursuing downstream industrialization to spur economic growth. This policy sees Indonesia gradually banning raw mineral exports in favor of processing them at home, thus bringing more added value to the economy.
On many occasions, Prabowo has expressed his intent to carry on this strategy should he win the election, saying that it could largely benefit the country. But this time, Prabowo said that the strategy could help Indonesia book a double-digit growth – much higher than what Indonesia had been witnessing thus far.
"By processing our natural resources domestically, I'm optimistic that we would be able to witness double-digit economic growth," Prabowo said in a live-streamed forum with members of the Indonesian Chamber of Commerce and Industry (Kadin).
Indonesia first started by stopping exporting nickel ores in January 2020. This led to the country shipping out more sophisticated goods such as iron, steel, and ferronickel. A ban on raw bauxite exports then came into effect three years later.
The Jokowi administration wants to replicate such a policy in other commodities, including coal, tin, copper, steel, gold, silver, asphalt, crude oil, natural gas, palm oil, and coconut. Other commodities include rubber, biofuel, log woods, pine resin, shrimps, fish, crabs, seaweed, and salt. This brings to a total of 21 commodities that Jokowi wants to process at home.
Slides played during Prabowo's presentation showed that he wanted to pursue downstream industrialization across the exact same 21 commodities.
As a case in point, Indonesia can process its bauxite ores into alumina, eventually refined into aluminum. The country can use aluminum for the automotive industry, according to Prabowo.
"All this time, we have exported them raw, and sold them at a cheap price, while importing cars. We cannot do that any longer," Prabowo told Kadin members.
Prabowo did not specify how much of a double-digit growth he envisioned if everything went as planned.
According to the World Bank, Indonesia's gross domestic product (GDP) would grow at an average of 4.9 percent over 2024-2026, easing slightly compared to the 5 percent in the previous year. The government reported that Indonesia's economy rose 5.31 percent in 2022, even beating most G20 nations. For instance, the US only grew 2.1 percent that year.
The World Bank statistics show Indonesia's GDP growth once hit 10.9 percent in 1968 – the highest it ever recorded to date. Followed by a 10 percent GDP growth in 1980. Both double-digit growths took place during Soeharto's era.
Jokowi oftentimes said that the domestic processing strategy for the national economy. The export value of nickel only reached Rp 30 trillion ($1.9 billion) before Indonesia stopped exporting unprocessed ores of the silvery-white metal. However, it has jumped by 17-fold to Rp 510 trillion.
Source: https://jakartaglobe.id/business/prabowo-banks-on-domestic-processing-for-doubledigit-growt