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Does Downstream RI Benefit China? These are the Latest Facts..

Jakarta, CNBC Indonesia – The Coordinating Ministry for Maritime Affairs and Investment (Kemenko Marves) has denied the statement by Senior Institute for Development of Economics and Finance (Indef) Economist Faisal Basri who said that 90% of downstream in Indonesia only benefits China.

Indeed, previously Faisal said that as much as 90% of the profits from the steel downstream program went to China, while Indonesia only got 10%.

“Steel is HS 72. If I’m not mistaken, it’s HS 72. There’s a lot of 7201-7202 like that, not steel in a more sophisticated form, and really we can’t get a maximum of 10%, 90% go to China,” he explained in Indef discussion, quoted Monday (14/8/2023).

Faisal’s statement then became the talk of the public. Deputy for Mining and Investment Coordination of the Coordinating Ministry of Maritime Affairs Septian Hario Seto spoke up. He said that Faisal’s mindset was wrong because if the export of nickel ore continues, the value of the benefits of the nickel ore that we have 100% will be enjoyed by other countries.

“So 100% foreign countries and 0% Indonesia. There are no taxes and additional workers created in Indonesia,” he said in a written statement, quoted Monday (14/8/2023).

He explained that Indonesia enjoys added value from nickel downstream reaching 53%. This is done by calculating that from 100% of the value of smelter products, the contribution of nickel ore is 40%, 12% of operating profit can be enjoyed by investors, and 48% is additional resources that need to be spent to process the nickel ore.

“Of the 48% figure, 32% is enjoyed by domestic economic actors in the form of coal (for electricity), labor and other raw materials. So only 16% is enjoyed by suppliers from abroad,” he explained.

Based on this calculation, the added value enjoyed by foreign parties (investors and suppliers) is 16% plus an operating profit component of 12%, so that it becomes 28%.

“Thus, the added value enjoyed by domestic is 32% or in proportion reflects around 53% (32% divided by 32% + 12% + 16) of the total added value of downstream nickel. Domestic added value will be greater if foreign investors “Those are reinvesting domestically, no longer getting a tax holiday or even involving local investors,” he said.

That way, Seto claims that the figures presented by him are more accurate than the data presented by Faisal.

“Even though my figure above is an estimate, I’m pretty sure my figure is more accurate than Faisal Basri’s claim that only 10% of added value in the country is enjoyed from downstream nickel,” he stated

Source : CNBC