Indonesia struggles to effectively promote its economy, despite being rich in natural resources. While the country has significant potential, current policies fail to provide meaningful support. In any industry, particularly resource-based sectors, success is not evenly distributed – there are a handful winners and most likely, a lot of losers.
Let’s say 2 are considered successful. However, behind them
lie 50 failed projects: those that never gained traction, and those that tried
but ultimately collapsed. The fundamental role of government policy should be
to create a system that lifts all boats and gives the 50 struggling projects a
fighting chance. Instead, the current approach is myopic. Policymakers fixate
solely on the two profitable ventures, seeing them only as cash cows to be
milked for increased tax revenue.
Predictably, the two "successful" companies
gradually decline, joining the very pool of struggling businesses they once
stood above. By the time the next, next, next administration takes office, they
are left bewildered, confronting a much more difficult economic landscape due
to decades of bad policymaking.
A return to Lex specialis regime for oil and gas and mining
would be a good start.
The downstreaming policy has been disastrous, even if it had had moderate success with nickel. Nickel smelters, you can build for $100m and upwards – but bauxite/alumina you need $500m, copper $1b, in order to reach scale – hence the limited scale of success with these commodities.
Forget about
coal gasification, it doesn’t work anywhere, why would it work in Indonesia.
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