North Maluku’s Economy Surges by 19% after Nickel Downstream: A Success Story?

nickel production

Minister of Investment and Head of the Investment Coordinating Board (BKPM), Bahlil Lahadalia, has unveiled the positive impact of Downstream on the economic growth of nickel-producing regions in Indonesia, particularly North Maluku.

The government’s focus on Downstream has resulted in widespread economic growth, bringing regions that specialize in raw nickel commodities on par with or even surpassing the national average.

Previously, these regions experienced economic growth below the national average. However, North Maluku, for instance, has witnessed a remarkable turnaround. Bahlil highlights the significant progress, stating, “Now, the economic growth of North Maluku is above the national economic growth, reaching 19 percent, and even last year it reached 27 percent.”

The success of North Maluku is not an isolated case, as other nickel-producing regions have also experienced economic growth above the national average. Central Sulawesi and Southeast Sulawesi, for example, have recorded impressive Gross Regional Domestic Product (GRDP) growth rates of 20.3 percent and 6.7 percent per capita, respectively, in 2022. These growth rates outperform the average national economic growth rate of 6.4 percent.

Bahlil firmly asserts the government’s commitment to downstreaming and rejects the proposal put forth by the International Monetary Fund (IMF) to gradually lift restrictions on commodity exports. He emphasizes that downstreaming will remain a priority, stating, “Even if the sky is about to fall, downstreaming will still be a priority for the government under Joko Widodo and Ma’ruf Amin’s administration. Secondly, the export ban will still be implemented.”

The IMF’s recommendation to reconsider export restrictions and evaluate the cost-benefit analysis periodically does not align with Indonesia’s vision for downstreaming.

Bahlil emphasizes the potential consequences of unrestricted commodity exports, including the environmental impact, job losses, and the loss of added value. He questions the double standard, pointing out that while Indonesia is pursuing Downstream, other countries are imposing export bans.

The government’s steadfast commitment to downstreaming in the nickel industry aims to foster sustainable economic growth and ensure long-term benefits for both the regions and the nation as a whole. By prioritizing Downstream and maximizing the value chain, Indonesia aims to create a more robust and resilient economy, while simultaneously addressing environmental concerns and generating employment opportunities.