Indonesia is at a critical juncture in its industrial strategy as it seeks to balance economic growth with sustainability and global competitiveness. A recent United Nations Economist Network (UNEN) Policy Brief highlights Indonesia’s nickel sector as a model for resource-based industrial policy, showcasing how government intervention can drive investment in high-value industries such as electric vehicle (EV) batteries and stainless steel production. 

With 22% of the world’s nickel reserves and contributing 37% of global supply, Indonesia has leveraged its natural resources through strategic export bans since 2014, enforcing them fully in 2022. This policy has attracted major foreign direct investment (FDI), particularly from China, and positioned the country as a global leader in refined nickel production. However, while Indonesia’s approach has accelerated growth, challenges remain in integrating technology, improving sustainability, and maintaining a competitive edge in the clean energy transition. 

According to Marco Kamiya, UNIDO Representative for Indonesia, Timor-Leste, and the Philippines, Indonesia’s industrial success hinges on long-term vision and global collaboration. “Indonesia’s approach to industrialization, leveraging its rich nickel reserves, has accelerated economic growth while creating opportunities for higher-value industries. However, sustaining this momentum requires a long-term vision that integrates innovation, sustainable practices, and global partnerships,” he stated. 

The UNEN Policy Brief underscores the importance of embedding sustainability and ESG principles into industrial policies. With the increasing global demand for carbon-neutral strategies, Indonesia must enhance its nickel processing capabilities and invest in cleaner technologies to align with international standards. The report also calls for greater international cooperation and equitable financing to support Indonesia’s transition toward a sustainable, innovation-driven economy. 

As industrial policies evolve worldwide, Indonesia’s experience serves as a case study in balancing economic development with ESG commitments, demonstrating how resource-rich nations can align with global sustainability goals while maintaining industrial competitiveness. 

Sources: 

https://indonesia.un.org/en/290403-indonesia%E2%80%99s-industrial-policy-crossroads-growth-sustainability-and-global-impact 

https://www.pagerpower.com/news/indonesias-environmental-crossroads-the-2024-presidential-election/ 

https://www.climateworkscentre.org/news/indonesias-energy-transition-crossroads-new-administration-old-challenges/