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Indonesia’s sovereign wealth fund Danantara Indonesia has unveiled six major natural resources processing projects worth $7 billion, marking a significant push toward downstream industrialization in Southeast Asia’s largest economy. The announcement came on Friday as the fund accelerates the government’s ambitions to add value to the country’s abundant raw materials rather than exporting them unprocessed.
According to Danantara CEO Rosan Roeslani, the initiative includes a green energy refinery operated by state-run oil company Pertamina, along with alumina and aluminum smelters, an ethanol plant, a palm-oil blended aviation fuel facility, and integrated poultry operations. These projects form part of 18 priority downstream projects the government plans to launch this year with combined investment reaching 618 trillion rupiah, equivalent to approximately $36.7 billion.
Downstream Processing Projects Target Economic Transformation
The downstream processing initiative reflects Indonesia’s strategic shift from raw material exports to value-added manufacturing. During the launch ceremony, Roeslani emphasized that the president had stressed the importance of accelerating downstream projects with direct benefits for Indonesian citizens. This approach aims to create jobs, increase government revenue, and develop industrial capacity across multiple sectors.
Pertamina’s refinery facility in Cilacap, Central Java province, represents a key component of the green energy transition. According to Emma Sri Martini, a company director, the plant currently converts used cooking oil into aviation fuel and produces 3,000 barrels per day. The facility plans to double its production capacity to 6,000 barrels per day, supporting Indonesia’s sustainable aviation fuel ambitions.
Diversified Portfolio Spans Multiple Industries
Additionally, the bioethanol plant project in East Java involves collaboration between Pertamina and state-owned plantation company Perkebunan Nusantara. The facility is expected to achieve annual production capacity of 30,000 kilolitres, contributing to Indonesia’s renewable energy goals and reducing dependence on fossil fuel imports.
Meanwhile, the aluminum sector projects located in West Kalimantan province demonstrate Indonesia’s commitment to processing its mineral wealth domestically. The alumina smelter has planned production capacity of one million metric tons annually, while the aluminum smelter targets 600,000 tons per year. These facilities will process bauxite ore mined within Indonesia, preventing the export of unprocessed minerals.
Food Security and Agricultural Development
In contrast to the energy and mineral projects, Danantara’s poultry initiative addresses Indonesia’s food security objectives. The sovereign wealth fund plans to develop integrated poultry facilities across 30 locations nationwide. According to the fund’s statement, these operations seek to produce 1.5 million tons of chicken meat and one ton of eggs, though the timeframe for achieving these targets was not specified.
However, questions remain about financing structures and implementation timelines for these capital-intensive downstream projects. Indonesia has historically struggled with delays in large infrastructure and industrial developments due to land acquisition challenges, regulatory hurdles, and financing constraints. The government’s ability to mobilize the full $36.7 billion investment commitment will likely depend on attracting private sector participation alongside state funding.
Strategic Implications for Indonesia’s Natural Resources Sector
The natural resources processing push aligns with Indonesia’s longstanding policy of maximizing domestic value-added activities. The country has previously implemented export bans on unprocessed nickel ore and bauxite to force development of domestic smelting capacity. These downstream projects represent the next phase of that industrial strategy across multiple commodity sectors.
The government has not announced specific completion dates for all six projects launched by Danantara. Industry observers will be monitoring progress on securing additional financing, obtaining necessary permits, and meeting production targets as these initiatives move from announcement to implementation over the coming months and years.
