Indonesia’s Green Industry Faces Policy Misalignment, Highligthting the Need for Coordination and Long-Term Industrial Strategies
Indonesia’s green industry development continues to face a gap between industrial progress and government policy adjustments (policy mismatch), particularly in advancing downstream processing toward higher-value products. Faris Abdurrachman, Executive Director and Lead Economist at Industrial Policy Lab Indonesia, explained on September 25, 2026, that the ban on nickel ore exports had successfully attracted substantial investment in smelting facilities but had not been followed by adequate strategies for further industrial development. To advance to the next stage of industrialization, Indonesia requires technological capabilities, large-scale financing, and human resource development, all of which demand long-term commitments, with investment outcomes potentially taking 10-15 years to materialize. Therefore, integrated industrial policies and a coordinating institution (orchestrator) with a 5-10 year development vision are needed, including workforce planning and adjustments to higher education programs to strengthen national industrial competitiveness.
Meanwhile, Naomi Devi Larasati, Policy Strategist Coordinator at Yayasan Indonesie Cerah (CERAH), highlighted that weak coordination among ministries and government agencies remains a major obstacle to green industry development, despite Indonesia’s abundant mineral resources and renewable energy potential. The involvement of numerous institutions with different responsibilities has complicated the division of roles and reduced the effectiveness of policy implementation. However, solar, hydropower, and wind energy resources could support low-carbon energy demand during industrialization. To accelerate the green industrial transition, Indonesia needs to strengthen cross-sectoral coordination, align industrial, energy, investment, and education policies, and establish sustainable strategies for technology and workforce development. These measures are considered essential for increasing industrial value added, enhancing global competitiveness, and supporting the transition toward a low-carbon economy.
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