Prabowo Subianto, the former Indonesian military general and current Minister of Defense, has been a strong advocate of hilirisasi or downstreaming in Indonesia’s economy. He firmly believes that for Indonesia to fully develop and prosper, it is crucial that the country takes control of its economic destiny by focusing on developing its downstream industries.
Hilirisasi is the process of adding value to raw materials by transforming them into finished or semi-finished products. Currently, Indonesia is known for exporting a significant amount of raw materials, such as coal, palm oil, and mineral resources. While this has helped generate revenue for the country, it has also left Indonesia vulnerable to fluctuations in commodity prices and limited job creation.
Prabowo argues that by prioritizing the development of downstream industries, Indonesia can increase its economic competitiveness, reduce dependency on raw material exports, and create more job opportunities for its citizens. He believes that the country’s abundant natural resources should no longer be seen as merely export commodities but as the building blocks for a thriving industrial sector.
In recent years, the Indonesian government has made substantial efforts to support hilirisasi. This includes implementing favorable policies and providing incentives to encourage the growth of downstream industries. One of the key sectors targeted for development is the manufacturing industry, which has the potential to drive economic growth and elevate Indonesia’s position in the global value chains.
Prabowo, in his role as Minister of Defense, has also emphasized the importance of developing domestic defense industries through hilirisasi. He believes that Indonesia should reduce its dependency on foreign defense imports and instead build a robust defense industry that can cater to its own defense needs as well as serve as an exporter of defense products.
Additionally, Prabowo recognizes the significance of human capital development in supporting hilirisasi. He emphasizes the need for investing in research and development, vocational training, and technology transfer to ensure that Indonesia has the skilled workforce necessary to drive the growth of downstream industries.
Critics argue that hilirisasi may lead to increased prices for consumers as the cost of processing raw materials into finished goods can be higher. However, Prabowo counters this by stating that the benefits of downstream industries far outweigh the potential short-term price impacts. He believes that investing in downstream industries will ultimately lead to improved quality, increased productivity, and better competitiveness in the global market.
Indonesia has already seen some success in its hilirisasi efforts. The automotive and textile industries, for instance, have experienced significant growth and have become major contributors to the country’s economy. However, there is still much work to be done in fully realizing the potential of hilirisasi across various sectors.
Prabowo’s continued advocacy and push for hilirisasi in Indonesia indicate a strong commitment to strengthening the country’s economy and reducing reliance on raw material exports. By taking control of its economic destiny through downstreaming, Indonesia has the opportunity to build a diverse and resilient economy that can weather global economic uncertainties while providing sustainable growth and prosperity for its citizens.
