Responds against the ban on raw mineral exports and the downstreaming policy is growing. Recently, the International Monetary Fund (IMF) called for an end to this policy and urged against expanding the ban to other commodities.

The IMF's demand has sparked strong opposition from the Minister of Investment and Head of the Investment Coordinating Board (BKPM), Bahlil Lahadalia. Bahlil claimed that the IMF employed a double standard.

On one hand, the IMF says they appreciate Indonesia's focus on downstreaming. On the other hand, the IMF hopes that Indonesia will gradually move away from the ban on raw mineral exports. Bahlil also stated that the IMF's demand has undermined the country's credibility.

The 1998 Indonesian economic crisis

Bahlil also reminded that the IMF had previously provided economic recovery recommendations to Indonesia during the monetary crisis in 1998. However, the IMF's recommendations failed to pull Indonesia out of the crisis.

"Are we going to follow a doctor who took us to the hospital room, put us in the ICU? Like a sick person who shouldn't be admitted to a surgery. But then admitted to a surgery, and it fails?" said Bahlil during a press conference at his office in Jakarta on Friday, June 30, 2023.

During the economic crisis of 1997/1998, Indonesia was forced to borrow USD9.1 billion from the IMF to overcome the financial crisis. The crisis also led to mass riots and conflicts in various regions, eventually resulting in the downfall of President Soeharto after 32 years in power. Indonesia only managed to repay its debt to the IMF in 2006 under the leadership of President Susilo Bambang Yudhoyono.

Despite receiving much criticism, the IMF in the past claimed to have played a positive role in helping economic recovery, particularly in Asia, in 1997 by providing significant assistance.

IMF's criticism on the ban on raw mineral export

Regarding the policy of banning raw mineral exports, the IMF's document "Executive Board Concludes 2023 Article IV Consultation with Indonesia" provides specific notes regarding Indonesia's plan to downstream nickel.

The IMF emphasizes the need for further cost-benefit analysis and consideration of its impact on other regions. In addition, the organization suggested that the ban on mineral exports, especially nickel, should be re-evaluated, taking into account its limited impact on job creation and the potential loss of state revenue from fiscal incentives provided to the sector.

The IMF also argued that increased foreign investment and the value of nickel exports do not guarantee significant benefits compared to the losses.

Therefore, the organization requests the Indonesian government to change this policy and consider discontinuing the ban on nickel exports and not expanding it to other commodities.