Luhut Binsar Panjaitan, senior adviser to Indonesian president Joko Widodo. Image source: Center for Strategic and International Studies via Flickr
His most significant policy accomplishment has been what is known in Jakarta as “downstreaming”, or the idea of leveraging Indonesia’s mineral wealth to secure investment in industrial development. The concept was not new when Jokowi, as the president is known, came in — it simply had never been put into action. And not without good reason, given the limited evidence of success elsewhere, with other mineral-rich nations also struggling to push investors toward processing and even manufacturing.
“It’s really difficult to find a close personality who can replace Luhut,” said Siwage Negara, a research fellow at the ISEAS-Yusof Ishak Institute, pointing to Panjaitan, whose most recent title is Coordinating Minister for Maritime Affairs and Investment, as a critical actor.The moment is a delicate one for the downstreaming campaign.
Without the dominance Indonesia enjoys in nickel, however, it is not clear that other export restrictions will ever generate a similar boost. In the first nine months of this year, the metal accounted for more than 40% of downstreaming investment, according to official figures. While nickel processing has boomed, a full-scale electric-vehicle and battery sector remains a distant prospect.
Key to his ascent has been his closeness to Jokowi, which dates back to a furniture-making venture they formed in 2009 while the outgoing president was mayor of a city in central Java. The two remained close, with Panjaitan stepping in to become Jokowi’s chief of staff after his election in 2014. The exit also raises uncomfortable questions for another high-profile success, the Just Energy Transition Partnership, which is still the most significant climate finance deal signed to date and probably also the most ambitious, seeking to move Indonesia away from coal dependence. The agreement’s existence was itself a victory, but as Panjaitan departs, it remains largely on paper.