Research downstream has become a widely proclaimed national aspiration. Recently, one of the major downstream agendas began to materialize with the inauguration of the Freeport smelter in Gresik.
President Joko Widodo performed this inauguration on Sep. 23. On the same day, Jokowi also inaugurated a smelter in West Sumbawa, West Nusa Tenggara.
UGM economics expert Dr. Fahmy Radhi identified two indicators that could be used to assess this mining downstream effort.
First, the goal of building this smelter is seen positively, as it aims to boost the added value of mining products and reduce reliance on domestic consumption.
Increased added value can benefit the nation economically. This contrasts with selling concentrates at meager prices, low royalties, and taxes.
The smelter allows minerals to be further processed, such as into cathodes, significantly increasing their market value. Second, the development of an industrial ecosystem is just as important as the primary objective.
“This inauguration is quite strategic, as this smelter is needed, especially in Gresik, primarily for Freeport’s tin. Freeport has been conducting downstream activities abroad for far too long despite the ban. Hopefully, there will be no more concentrate exports,” he explained on Thursday (Oct. 3).
Dr. Radhi further revealed that smelters can encourage the growth of other industries that produce derivative products.
He believes that this industrial ecosystem must be developed. Once established and well-integrated, Indonesia can realize its vision of becoming an industrialized nation.
However, he emphasized that the government must be strongly committed and firm in enforcing the established regulations to ensure this ecosystem’s sustainability.
“The government needs compelling policies or regulations, and their enforcement must be clear. Once the economic linkage is formed, investors will come without being forced to do so. They will invest in various related industrial sectors, especially if a healthy investment climate and abundant upstream and downstream resources are present. This will certainly attract investors.”
Additionally, Dr. Radhi highlighted the importance of prioritizing local workers around the smelter area. This would create job opportunities and contribute to regional income.
However, environmental issues must not be overlooked. Therefore, Dr. Radhi urges the government to ensure that industries take responsibility for financing or addressing ecological restoration.
“This plan has many positive aspects as long as the government is serious and consistent. It’s about pursuing added value and building an industrial ecosystem that will be the foundation for Indonesia’s industrialization. Indonesia’s golden future is one of the hopes from downstream. The next cabinet must commit to continuous development,” he concluded.
Author: Bolivia
Editor: Gusti Grehenson
Photo: Suara Pembaruan
Post-editor: Afif