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PROYEK SMELTER - JAKARTA. The aggressive downstream in Indonesia's nickel sector is seen to benefit China more.
Faisal Basri, a senior economist at the Institute for Development of Economics and Finance (Indef), revealed that 90% of the added value from nickel downstream goes to China, while Indonesia only enjoys 10%.
"The nickel is in Morowali. We have nickel ore, for example, worth Rp 100 and then invite China to process it into ferronickel with an added value of Rp 300. The added value that goes to the region and the central government is almost zero," Faisal said in a public discussion on Pancasila's Birthday: Is the Economy Fair for All?, held online, on Tuesday (4/6).
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Faisal explained that Indonesia's Gross Domestic Product (GDP) increased 1.8 times from 2010 to 2023. Meanwhile, the regional gross domestic product (GDP) in the Morowali district drastically increased 25.2 times.
However, he highlighted that this increase in GDP was not followed by household consumption expenditure in the Morowali district.
"If the national GDP increases 1.8 times, consumption also increases 1.7 times, almost the same. Meanwhile, in Morowali, the GDP increased 25.2 times, but household consumption expenditure only increased 2.2 times. It's not even a tenth. This means that the fortune from this nickel mine trickles down very little, all exploited for the interests of non-Morowali residents," Faisal said.
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Then, looking at the performance of goods and services exports, Morowali recorded an increase in exports 107.1 times, while nationally only 1.7 times.
"This means it's clear. The GDP increased 25.1 times, and most of the results are exported. Meanwhile, the welfare of the people (seen from consumption) is only 2.2 times," he said.
Faisal also revealed several reasons why Chinese smelters are flocking to Indonesia. These range from the provision of various tax incentives to the ease of foreign workers entering without a work visa.
"This is why China comes because they are entertained, while the Indonesian people suffer. Everything is given to China, what is not given, well they all flock to Indonesia," he said.
Faisal also highlighted that there are still businessmen who export nickel ore, even though Indonesia itself has banned the export of this commodity since January 1, 2020.
"The export of nickel ore has been banned but until 2023 there are still 300,000 tons imported by China from Indonesia, but in Indonesia, there is no record. It turns out that until 2023, this nickel ore is still flowing and is exported illegally by the elites," he explained.
