Indonesia doubles down on nickel export bans and downstreaming

Indonesia diversified its economy away from commodity exports. Nickel export ban aims to boost domestic value but poses challenges.

The Indonesian Nickel Export Ban

Economists have long advised Indonesia to reduce its reliance on commodity exports and promote economic diversification. The Indonesian government has been pursuing this through the establishment of special economic zones and tax holidays. But in 2020, the COVID-19-induced recession led to a more draconian diversification approach with a ban on the export of all unprocessed nickel.

Controversy Surrounding the Nickel Export Ban

Using an export ban as an industrial policy instrument is controversial since it creates market distortions and its goals must be carefully stated and measured. Nickel is an important material for the production of most rechargeable batteries and its significance in the global supply chain has…