August 17, 2023
JAKARTA – President Joko “Jokowi” Widodo has asked the banking sector to support the country’s downstream industries, which the government hopes will boost the country’s export value, as well as supporting economic growth.
The Association of State-Owned Banks (Himbara) said the banking sector would commit to the request with downstream industries in the country having reached the point of no return, implying there was nothing that could be done other than supporting them to realize the plan.
“[Downstream industries] will not stop. Therefore, the banking sector is committed to supporting downstream processing so that the Indonesian people can enjoy the added value [from exports],” Himbara chairman Sunarso said in a press conference held in the State Palace on Monday.
The development of downstream industries is designed to boost Indonesia’s economic growth and increase the country’s exports, as well as improving its competitiveness in the international market, the Investment Ministry says.
Indonesia banned nickel ore exports in January 2020 and required miners to process the commodity in the country to produce higher value goods for export.
The government has said it will expand the export ban to bauxite in June this year, while other commodities such as tin and copper may follow as well.
A similar push is also expected for coal, where the government seeks to turn the commodity into higher value products like methanol and dimethyl ether, to reduce the country’s reliance on imported oil and liquefied petroleum gas (LPG).
Coordinating Minister for Economic Affairs Airlangga Hartarto said the government would continue to evaluate adding more natural resources to the downstream list.
The government and Bank Indonesia (BI) will provide incentives, particularly to tackle the financing difficulties, he said, but no details are available as yet.
“It can be in the form of domestic US dollar loans, investment loans and working capital loans. All for the downstream industry and manufacturing sectors and we hope local banks will provide the support,” Airlangga told reporters in the same press briefing.
Financial Services Authority (OJK) chairman Mahendra Siregar added that the financial sector would help to boost the economy like it did last year, which he hoped would help lessen the impact of global uncertainty and a looming recession in advanced economies.
Separately, the OJK said it had provided incentives to banks supporting priority sectors and downstream industries by easing their asset risk requirements and lending quality assessments.
The writer is an intern at The Jakarta Post.