Indonesian exports could surpass $300 billion by 2024, driven by bauxite and other commodity-based shipments

On October 24, 2022, Luhut Pandjaitan, the Coordinating Minister of Maritime and Investment Affairs Indonesia, stated that the island nation's export is anticipated to cross $300 billion by 2024 as the government is getting ready to ban bauxite exports, among other commodities, to encourage investment in local manufacturing sectors.

He further added that exports could surpass a record $280 billion this year, with nickel-based steel shipments growing sharply after the country banned nickel ore exports. In contrast, loads of other commodities got a boost from high prices.

Indonesia lacked alumina production due to a lack of infrastructure development. However, in 2015, Indonesia’s first alumina refinery started its commercial operations. The second phase of a China Hongqiao Group alumina plant in Indonesia should begin by the end of this year. Moreover, Covid pandemic impacts have created some difficulties for the project. The second-largest coal miner in Indonesia, PT Adaro Energy Indonesia Tbk will enter the aluminium sector as a part of the company's diversified business portfolio.

The largest aluminium producer in the GCC region, Emirates Global Aluminium (EGA), has inked a memorandum of understanding (MoU) with PT Inalum (Persero), the most significant primary aluminium producer in Indonesia, concerning a strategic alliance to upgrade Inalum's aluminium by 400,000 tonnes per year. The second-largest coal miner in Indonesia, PT Adaro Energy Indonesia Tbk, will enter the aluminium sector as a part of the company's diversified business portfolio.

Indonesia, Southeast Asia's largest economy, has been enjoying an export boom for more than a year due to rising commodity prices created by the Ukraine-Russian geopolitical crisis. The government banned nickel ore exports in 2020 in a move that attracted investment in processing facilities - 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 US$300 billion or more."

"If downstreaming works, by 2024, our economic growth will be exponential. Indonesia's gross domestic product could reach $3.5 trillion by 2030, almost triple the current $1.19 trillion in 2021."

Shipments of nickel metals will rise to nearly $30 billion this year, compared with US$21 billion in 2021 and about $1.4 billion in 2015."

In addition, he predicted that Indonesia would be capable of producing electric vehicle batteries by 2024.