LPEM UI: Manufacturing's Contribution to Indonesia's Growth Falls

Indonesia plans to launch its own mineral and strategic commodities exchange, the Mineral and Strategic Commodities Exchange (BMKS), by January 1, 2027, aiming to establish a domestic reference price and reduce reliance on overseas exchanges. This initiative, spearheaded by the Ministry of Energy and Mineral Resources (BIM), is part of broader efforts to enhance transparency, standardization, and economic control over critical resources. According to Brian Yuliarto, head of BIM, the BMKS will allow for transparent price information, standardized quality assessments, and secure transaction settlements under the oversight of the Financial Services Authority (OJK). The exchange is designed to serve as a comprehensive platform for the entire value chain, from resource extraction to downstream processing, ensuring credibility and traceability in traded commodities. A dedicated Task Force, comprising BIM, Danantara, Bank Indonesia, the OJK, and other stakeholders such as clearing houses, surveyors, warehouse operators, mining firms, and industry associations, is actively working to finalize the exchange’s operational framework. The group is coordinating with relevant ministries, including the Ministry of Energy and Mineral Resources, the Ministry of Trade, the Ministry of Industry, and the Coordinating Ministry for Economic Affairs, to align the BMKS with national economic goals. Yuliarto emphasized that cross-sector collaboration is essential to ensure the exchange meets regulatory standards and supports policies related to mining, trade, industrial development, and national security. The BMKS is expected to play a pivotal role in advancing Indonesia’s downstream industries, enhancing self-reliance in the defense sector, and improving economic resilience. By creating a liquid and transparent exchange, the government hopes to attract both domestic and international investors, foster innovation, and promote sustainable resource management. Yuliarto highlighted that BIM is focusing on strengthening data on mineral resources and reserves, standardizing product specifications, and accelerating downstream processes to ensure the traded goods meet high-value criteria. These measures are intended to position Indonesia as a competitive player in the global commodities market while safeguarding national interests. President Prabowo Subianto has set a firm deadline for the BMKS to begin operations on January 1, 2027, following his announcement during the presentation of the 2027 state budget and financial note. He stressed the need for swift legislative action to enable the exchange’s functioning, emphasizing that the establishment of the BMKS is a priority for the administration. The government is also working to expedite the drafting and enactment of regulations that govern the exchange’s operations, aiming to ensure legal clarity and investor confidence. In addition to the BMKS, Indonesia is pursuing multiple strategies to boost economic growth and diversify its economic base. The government is streamlining the licensing process for investments, reducing the average time required for project implementation from around five years to a shorter period. This reform, introduced via Government Regulation No. 28 of 2025, allows businesses to proceed with development activities even before all permits are finalized, thereby accelerating investment realization. The Ministry of Investment and Downstreaming is expanding the scope of deemed approval schemes to cover more than 287 business activities, with the goal of attracting higher levels of capital inflows and supporting the nation’s target of securing Rp13,000 trillion in investment by 2029. Simultaneously, Indonesia is leveraging its creative economy as a driver for sustained growth, aiming to achieve a 6 percent GDP expansion in 2027. The Creative Economy Master Plan, known as Rindekraf, outlines a strategic approach to harness creativity, intellectual property, and regional strengths to stimulate economic activity. Programs such as Creative Village Activation and Creative Hub Activation are being rolled out to transform rural areas into hubs of innovation and entrepreneurship, while initiatives like Creative by Indonesia focus on protecting and promoting local intellectual property. The government believes these efforts will contribute significantly to employment generation and economic diversification, complementing traditional sectors and fostering long-term prosperity.