What You Need to Know About Downstream Program

TEMPO.CO, Jakarta - Indonesia’s downstream policy has garnered global attention following President Joko "Jokowi" Widodo's insistence on enforcing downstream programs for oil and gas, agro, coal, mining, and mineral-based industries. The policy prohibits the export of such raw materials in an effort to promote the development of the country's processing and refining industry.

In his annual speech before the parliament ahead of Independence Day on Aug. 17, 2023, Jokowi called on his successor to continue prioritizing the processing of natural commodities onshore, to transform Southeast Asia's largest economy into a global powerhouse by 2045.

What is the downstream program?

The downstream program refers to the development of an industry that processes raw materials into finished goods. It aims to optimize the processing and transformation of raw materials or natural resources owned by a country into higher-value finished products. 

In an economic context, it is viewed as a crucial strategy for enhancing a country's competitiveness and creating long-term economic sustainability. Downstreaming can be applied to various sectors such as agriculture, fisheries, oil and gas, and mining.

What is the goal of the downstream program?

The primary objective of the downstream process is to increase the selling price of a product, thereby adding economic value and generating profits.

According to various sources, the benefits of performing a downstream process include adding value to a product, optimizing available natural resources, producing new products to penetrate international markets, and creating employment opportunities.

Negative effects of the downstream program

Despite its many benefits, it cannot be denied that some negative effects of the program need to be considered. such as the following:

1. Dependence on specific industries

Downstreaming can lead to greater dependence on certain industries, thereby exposing the economy to market fluctuations or setbacks in that industry.

2. Social and economic inequality

It can also lead to social and economic inequalities since parts of society lacking skills or sufficient access to new economic opportunities may be left behind and find it challenging to keep up with economic developments.

3. Increased pollution and other environmental impacts

Advanced manufacturing industries often require significant amounts of energy and can generate waste and pollution, which if not appropriately managed, can lead to degradation of environmental quality, including air, water, and soil pollution, and damage to ecosystems.

4. Inequality of access and education

Downstream processes often require skilled and trained labor, but not all communities have equal access to the education and training needed to meet the demands of a growing job market.

5. Dependence on global markets

Economies that rely on downstream programs are also vulnerable to changes in global markets. Fluctuations in raw material prices, global demand, or changes in international trade policies can have a significant impact on a country's economy.

ANGGITA VIANDHINI NUGROHO PUTRI 

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