With an abundance of natural resources, Indonesia has the potential to position itself as a global powerhouse. However, achieving this status requires more than raw materials—it demands a focused strategy on downstream. President Joko Widodo believes that by concentrating on three key commodities, Indonesia can rise to the ranks of developed nation. So, which commodities hold the key to Indonesia’s future?
President Jokowi pointed out that Indonesia’s economic transformation could be driven by the downstream of three critical products: seaweed, cocoa, and coffee. Speaking at the opening of the 22nd Indonesian Association of Economics Graduates (ISEI) Congress & National Seminar 2024 in Surakarta, Central Java, he urged economists and stakeholders to design an effective strategy for labor-intensive downstream industries.
“I want to focus on downstreaming in labor-intensive sectors like seaweed, which has not yet been well managed,” Jokowi said during his speech.
He explained that seaweed, in particular, has tremendous potential for creating diverse derivative products. From organic fertilizers to cosmetics, flour, agar, and even jet fuel, seaweed could revolutionize multiple industries. Moreover, Indonesia’s natural advantage is clear. The country boasts the second-longest coastline globally, with 81,000 kilometers of shores, making it ideal for seaweed cultivation.
“This is a massive opportunity, but it needs a clear strategy and careful planning to achieve meaningful results,” Jokowi emphasized.
Coffee was also highlighted as a commodity with immense untapped potential. Indonesia has 1.2 million hectares of coffee plantations, but Jokowi noted that the productivity per hectare is still below expectations, with yields averaging only 2.3 to 2.5 tons.
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Unfortunately, despite coffee being in high demand globally and prices rising annually, Indonesia’s coffee industry remains underdeveloped. “Vietnam, for instance, produces 8 to 9 tons per hectare. How is it that we’re lagging behind? We started earlier, but our research and development in this area have been lacking,” he said.
The conversation didn’t end there. Jokowi also identified cocoa as another commodity in need of attention. Despite having 1.4 million hectares of cocoa plantations, Indonesia still imports raw cocoa, a glaring issue for a country with such vast agricultural resources.
“We have the industry, but we’re importing raw cocoa. That’s a huge mistake. Other crops like pepper and patchouli, with their high-value derivatives, also need strategic downstreaming to unlock their full potential,” he added.
Jokowi is confident that downstreaming will significantly boost Indonesia’s revenues, providing the example of nickel as a case study. Before 2021, raw nickel exports brought in $3 billion or IDR 45 trillion. However, after the government banned the export of unprocessed nickel, the value surged, reaching IDR 340 trillion in 2022 and IDR 520 trillion in 2023.
“The increase is remarkable. Some may argue that it only benefits companies, but that’s far from true,” Jokowi explained.
“Let’s not forget the taxes we collect—corporate taxes, employee taxes, export duties, and export taxes. These, along with non-tax revenues, contribute significantly to the state’s income,” he concluded.
With the right strategy and focus on these key commodities, the future of Indonesia as a developed nation appears not only feasible but increasingly within reach.
