Several Countries Have Conducted Downstream, Not Only Indonesia

Several Countries Have Conducted Downstream, Not Only Indonesia

To spur the domestic economy and also encourage Indonesia to become a developed country, Indonesia is intensively conducting downstream. This decision was rejected by the G20 countries. In fact, Britain and China have also conducted downstream.

The Minister of Investment/Head of BKPM Bahlil Lahadalia said that although downstream could make Indonesia a developed country, this program had several challenges.

One of them is the rejection related to downstreaming by several G20 countries. Unmitigated, several countries have even sued Indonesia at the World Trade Organization (WTO).

“Not all countries want Indonesia to become a developed country through downstreaming. Because countries in the G20 are against downstream,” said Bahlil during his visit to the Bandung Institute of Technology (ITB) today, Wednesday (5/10/2022).

In fact, several developed countries are also doing downstream. Noted, Britain, the United States, China, and Finland have done the same thing.

Bahlil in his presentation revealed, in the 16th century, England banned the export of raw wool to encourage the domestic textile industry. The existence of this policy made England the center of European textiles and became the capital of the birth of the modern industrial revolution.

The next country is America. Bahlil said that in the 19th and early 20th centuries, the US applied very high import taxes as an effort to encourage domestic industry.

“At the beginning of the 20th century, the US import tax was 4 times Indonesia’s current import tax, even though at that time the US GDP per capita was approximately the same as Indonesia today,” he said.

Furthermore, before China joined the WTO, this country applied TKDN (Domestic Component Level) of up to 90 percent for automotive.

This policy was also applied by the UK to several automotive companies in the 1980s with a TKDN regulation of up to 90 percent.

Bahlil said that the TKDN policy was widely used by developed countries to ensure that investment had a positive impact on the social economy.

Finally, there is Finland, where until 1987 the country imposed restrictions on foreign ownership to empower local business actors.

Foreign-owned companies above 20 percent are categorized as “dangerous” companies. Similar policies are also implemented by various developed countries in the world.
Until now, the government has banned exports of raw nickel ore and plans to stop exports of tin this year and bauxite in 2023.

The Minister of Investment/Head of BKPM Bahlil Lahadalia revealed that in 2017 the value of Indonesia’s nickel exports was only US$3.3 billion. However, downstream following the direction of President Joko Widodo (Jokowi), the value of nickel exports in 2021 will even reach US$20.9 billion.

With this achievement, the government targets the nickel export value of US$30 billion this year.