Into Sustainable and Equitable Nickel Downstreaming in Indonesia: What Policy Reforms are Needed?

Abstract

Nickel downstreaming offers a significant improvement in Indonesia's economy, yet regions housing industrial sites face challenges in unemployment, tax revenue, community involvement, and environmental degradation. To achieve sustainable and equitable goals, the downstreaming policy needs to be reformed. This study identifies the needed reforms for nickel downstreaming in Indonesia using regulatory impact assessment, supplemented by expert judgments. In the short term, the government needs to revise the revenue sharing scheme for local governments and establish a downstream fund management institution. In the long term, the government can provide additional capital injection to the fund management institution, downstream to be able to provide support for more productive local investment and implement technology transfer requirements for foreign investors to get incentives.