IMF Apologizes for Export Restriction Recommendation, Acknowledges Indonesia’s Progress in Nickel Downstream

Several Countries Have Conducted Downstream, Not Only Indonesia

The Ministry of Maritime Affairs and Investment Coordination (Kemenko Marves) has disclosed that the International Monetary Fund (IMF) has formally expressed regret for its prior recommendation advocating the removal of export limitations on mineral commodities, a proposal aimed at facilitating downstream processing in Indonesia.

This apology was conveyed directly by the Managing Director of the IMF, Kristalina Georgieva, to Indonesia’s Coordinating Minister for Maritime Affairs and Investment (Menko Marves), Luhut Binsar Pandjaitan, during a significant meeting that took place on August 9, 2023.

Septian Hario Seto, who holds the position of Deputy of Investment and Mining at Kemenko Marves, emphasized that a robust and enduring camaraderie has evolved between Luhut and Kristalina since 2018. Their relationship has fostered a conducive environment for open dialogues, even concerning complex subjects such as this.

“In addition, she extended her heartfelt apologies to the Indonesian government through Mr. Luhut, if the recent IMF report inadvertently gave rise to disputes within the Indonesian context,” Seto conveyed in an official statement, as quoted on Sunday (August 13, 2023).

Seto proceeded to highlight that Kristalina’s statement was accompanied by a genuine acknowledgment of Indonesia’s commendable progress in implementing the nickel downstream program, an initiative that has significantly contributed to the nation’s economic vitality and overall macroeconomic stability.

In earlier correspondences, the IMF, via the Document of Staff Consultation (IMF Executive Board Concludes 2023 Article IV Consultation with Indonesia), put forth a series of suggestions and insightful considerations aimed at assisting the Indonesian government in gradually easing export constraints on mineral commodities.

Within this document, the IMF also advocated for a judicious approach, advising the Indonesian government to avoid extending the current ban on nickel ore exports to include other commodities.

As widely known, the current administration is actively advancing the cause of downstream, which encompasses a broad strategy including extending the policy of export restrictions beyond nickel ore to encompass various other raw mineral commodities, such as copper, bauxite, tin, and agricultural products.

The government’s strategic vision extends to the development of battery manufacturing for electric vehicles, which in turn holds the potential to significantly enhance the value of exports.

Despite these deliberations, the IMF underscores the importance of a nuanced understanding of both the long-term advantages and potential costs associated with the comprehensive downstreaming program. This includes a consideration of any ripple effects that might emanate from export restrictions to other nations.

On a different note, President Joko Widodo (Jokowi) conveyed his unwavering resolve, indicating his readiness to tackle any legal challenges arising from this policy decision. Jokowi underscored that lawsuits, although not uncommon, are outweighed by the overarching objective of enhancing the value addition within Indonesia’s domestic mining sector.