Indonesia‘s exports could hit a record $280 billion this year, with nickel-based steel shipments rising sharply after the country banned nickel ore exports, a senior minister said on Monday.
And exports could top $300 billion by 2024 as the government prepares to regulate exports of other commodities, such as copper, bauxite and tin, to encourage investment in local downstream industries, Coordinating Minister of Maritime and Investment Affairs, Luhut Pandjaitan, said in an interview.
Southeast Asia’s largest economy has been enjoying an export boom for more than a year due to rising commodity prices, which has been exacerbated by the war in Ukraine.
Indonesia is the world’s biggest exporter of thermal coal, palm oil, refined tin and a major seller of nickel-based steel, copper, rubber and other resources.
The government banned exports of nickel ore in 2020 in a move that has attracted investment in processing facilities – a strategy officials refer to as “resource downstreaming”.
Luhut said the government was working on a downstreaming plan to develop an industry that would process bauxite, copper, tin and, later on, palm oil, into higher value products, replicating the success of the nickel export ban.
“Our exports last year were $232 billion. This year maybe $280 billion. Maybe by 2024, I think we can reach $300 billion or more,” Luhut said.
“If this (downstreaming) works, by 2024, our economic growth will be exponential,” he said, adding that Indonesia‘s gross domestic product could reach $3.5 trillion by 2030, almost tripling from the current $1.19 trillion in 2021.
Shipments of nickel metals will rise to nearly $30 billion this year, compared with $21 billion in 2021 and about $1.4 billion in 2015, he said.
His rosy outlook has taken into account global uncertainties, including the potential drop in prices of some commodities next year, Luhut said, though he added coal and palm oil prices are expected to hold up in 2023.
He also expected Indonesia to be able to produce electric vehicle batteries by 2024.
However, Luhut declined to detail Indonesia‘s potential policy to regulate other commodity shipments, saying authorities were still considering whether to use an outright ban or tax instruments to deter exports.
President Joko Widodo said last week the government was still making calculations about a possible tin export ban and authorities were committed to steering the mining industry towards more domestic processing.
The European Union has complained to the World Trade Organization about Indonesia‘s nickel ore export ban and a dispute panel is due to announce a report this quarter. The president last month said Indonesia would likely lose in the dispute.
Drug Companies May be Charged Over Child Deaths
Meanwhile, in other news, Indonesia‘s food and drugs agency said on Monday it may pursue criminal action against two pharmaceutical firms that made products linked to acute kidney injury (AKI), amid a spike in cases and deaths among children this year.
Authorities have temporarily banned sales of some syrup-based medications and identified the presence in some products of ethylene glycol and diethylene glycol as possible factors in the deaths of 141 children, most of which were under five.
BPOM chief Penny Lukito said the agency would work with police to investigate the two firms with a view to criminal proceedings over the composition of their products. Penny did not identify the two companies.
“There are indications in their products … (of concentrations) that are highly excessive, highly toxic, and suspected to cause the kidney injury,” Penny told a news conference.
Authorities have said cases spiked from August to October.
Asked why the spike was only recent, health minister Budi Gunadi Sadikin said it was most likely due to changes in the raw ingredients of medications.
He said the government had data on recent imports of raw ingredients and would share it at a later time.
Indonesia imports most of its raw ingredients for medicines from India and China, according to its health ministry.
Indonesia is investigating its rise in AKI cases in consultation with paediatric experts and the World Health Organization (WHO), following a similar pattern in Gambia, which has seen at least 70 child AKI deaths related to syrup medications.
BPOM recently named three medications that contained high levels of ethylene glycol and diethylene glycol and ordered those be taken out of circulation.
- Reuters with additional editing by Jim Pollard