President Joko “Jokowi” Widodo has offered investment opportunity in asphalt downstream industry for foreign and domestic investors. He explained that Buton – an island in Southeast Sulawesi province – has 662 million tons of asphalt deposits.
“I visited Buton two months ago and [I received the information that] the [asphalt] deposit is 662 million tons. When I made a visit to the field, I remember all the numbers,” the president said in his opening remarks at the Investor Daily Summit at the Jakarta Convention Center on October 11, 2022.
In the past, Buton had been famous as an asphalt producer. The asphalt from the island was produced and processed commercially. However, the production was terminated due to the cheaper price of imported asphalt. As the consequence, 95% of Indonesian asphalts are now imported from overseas.
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The president claimed that he has ordered in less than two years that Indonesia should stop importing asphalt. All asphalts in Indonesia should be supplied from the Buton island.
“It is an investment opportunity for you, ladies and gentlemen, to establish asphalt industry in Buton,” he said.
The asphalts will be supplied to domestic and global markets. Indonesia’s latest needs of asphalt is 5 millions tons per year. It means Indonesia still has 120 years to manage Buton asphalt.
Development of downstream industry
Jokowi said the development of downstream industry was the key for Indonesia to move forward. The success story of the downstream industry development is nickel. When Indonesia still exported nickel ores or raw materials, the value of the raw material export was IDR 15 trillion. After the development of nickel downstream industry, Indonesia nickel sectors export reached US$ 20.9 billion or around IDR 360 trillion.
“It is just from one commodity. We still have nickel, bauxites, copper and tins and asphalts,” said Jokowi.
The other success story is the take over of 51% shares of the copper and gold mining company PT Freeport Indonesia. Jokowi said he has visited Freeport Indonesia mining site and calculated the state revenues from Freeport.
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In the past, Indonesia can only secured 9% dividend from the company, because Indonesia had only 9% shares. However, currently with 51% shares, Indonesia can secure 70% of the Freeport revenues from tax, royalty, export tax, dividend and non tax revenues.
“It means that the state really secure the revenue,“ Jokowi added.
Following the nickel ore export total ban, Jokowi said that in the next two years he would also ban the export of raw materials of asphalts, tins, bauxites and coppers. He reasoned that the policy would enable the export tax, royalty and dividend to be enjoyed domestically.
