Value chain

Possible mission: Moving up the value chain – Academia

Dimas Muhamad (The Jakarta Post)


Jakarta ●
Tue 25 January 2022

“Indonesia is doing its best to scare off investment,” was the headline of a 2019 op-ed in one of the world’s most prominent media outlets. The author claimed that the impending nickel ore export ban that our government plans to impose in early 2020 amounts to “madness”. In a way reminiscent of the old colonial world, he concluded that “relatively distant commodity exporters would be better off just digging up rocks and sending them overseas.”

As brazen as the author was, he was not alone. Skepticism abounded when the Indonesian government moved to force investors to add value to our mineral resources through the ban on mineral exports. Many have zealously defended the sanctity of the free market and its mantra of comparative advantage. They argued that exporting raw materials was the most effective way for Indonesia to participate in the global value chain.

In other words, this is who we are as a nation. No matter how well intentioned, any policy aimed at altering our comparative advantage is misguided at best and disastrous at worst. This reckless policy will trigger a devastating backlash as foreign investors turn their backs on such a protectionist and inward-looking country.

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