Jakarta, Indonesia Sentinel — Indonesia’s Energy and Mineral Resources Minister (ESDM), Bahlil Lahadalia, has called on banks and non-bank financial institutions to finance domestic downstream investment projects in line with Presidential Decree No. 1 of 2025.
Appointed as Chair of the National Task Force on Downstream Development and Energy Security, Bahlil emphasized the crucial role of financial institutions, including both domestic banks and non-bank entities, in supporting Indonesia’s downstream development initiatives.
“Our banking sector and non-bank financial institutions must be willing to take part in financing downstream investment projects,” Bahlil said at the Ministry of Energy and Mineral Resources office in Jakarta on Friday, as reported by Antara.
Beyond State Budget Allocations
Bahlil highlighted the government’s efforts to establish financing sources for downstream projects beyond the state budget (APBN). This includes tapping into funds provided by banking and non-banking financial entities.
Under Presidential Decree No. 1 of 2025, which established the Task Force on Downstream Development and National Energy Security, financial institutions are mandated to participate in funding such projects.
“All entities, whether state-owned or private, must follow the rules if they wish to operate in the Republic of Indonesia,” Bahlil said.
The minister expressed hope that alternative funding sources would allow state budget resources to be allocated to other critical programs, such as free nutritious meal initiatives, healthcare, and infrastructure development.
Possible Lower Interest Rate
Regarding the possibility of offering lower interest rates for downstream projects, Bahlil noted that the internal rate of return (IRR) for such initiatives is generally favorable, making them attractive to private investors.
“The average IRR is above 11–12 percent. With IRR at 11–12 percent, I don’t think lower interest rate interventions are necessary for downstream projects,” he explained.
The IRR is a metric used to evaluate the profitability of an investment, with higher IRR values indicating greater financial viability.
Presidential Task Force
President Prabowo Subianto officially established the Task Force on Downstream Development and National Energy Security, led by Minister Bahlil Lahadalia and comprising various government ministers and agency leaders.
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According to Antara, Presidential Decree No. 1 of 2025 aims to expedite downstream development across multiple sectors and bolster national energy security.
The decree, signed by President Prabowo on January 3, targets key sectors, including minerals and coal, oil and gas, agriculture, forestry, and marine and fisheries. The downstream initiatives aim to increase the added value of domestically produced commodities, driving economic growth and sustainability.
(Raidi/Agung)
