Downstreaming cuts ICOR to 3, boosts investment efficiency: Airlangga

Jakarta (ANTARA) - Coordinating Minister for Economic Affairs Airlangga Hartarto revealed that the government's mineral and coal downstreaming program in industrial estates and special economic zones (SEZs) has significantly improved investment efficiency.

The optimization is reflected in the Incremental Capital Output Ratio (ICOR) value within these downstream hubs, which has dropped to approximately 3, significantly lower than the national ICOR average of 6.

"We are seeing that mineral and coal downstreaming, which is concentrated within Industrial Areas and Special Economic Zones (SEZs), is driving robust economic growth," Airlangga said in a statement on Thursday.

"An ICOR value of 3 in these zones is relatively good compared to the national average,” he added.

Airlangga noted that the processing industry has evolved into the primary engine of regional development, signaling that Indonesia's economic transformation through downstreaming is successfully decentralizing wealth.

Amid persistent global economic uncertainty, the minister highlighted that Indonesia's macroeconomic indicators continue to display strong resilience.

In the first quarter of 2023, the national economy expanded by 5.61 percent year-on-year (yoy), outperforming most G20 member countries.

According to Airlangga, this growth trajectory was sustained by robust government spending, resilient household consumption, and steady investment inflows.

Investment realization during the period reached Rp498.8 trillion (approximately US$28.02 billion), while foreign exchange reserves remained secure at US$144.9 billion.

Additionally, the national inflation rate was recorded at a stable 3.08 percent, credit distribution grew by 11.51 percent, and the national trade balance recorded a surplus for 72 consecutive months.

This economic growth was distributed across the archipelago, with several regions outside Java recording growth rates well above the national average. Driven by downstream projects, economic growth reached 6.95 percent in Sulawesi and 7.93 percent in the Bali-Nusa Tenggara region.

"All of these indicators confirm that the Indonesian economy stands on a healthy, resilient foundation and is ready to continue its growth momentum. However, we still have to boost other sectors that generate foreign exchange, such as tourism," Airlangga concluded.

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Translator: Bayu Saputra, Yashinta Difa

Editor: Azis Kurmala

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