Bahlil takes on new role, questions remain over its purpose

Bahlil Lahadalia’s latest appointment as coordinating downstream and energy transition minister gives him an unusually broad mandate, as he will also retain his position as energy and mineral resources minister, though the scope of the newly established coordinating ministerial post is yet to be clearly defined in terms of authority and jurisdiction. The arrangement seems to be in line with the government’s continuing prioritization of downstream industrial development, but raises a central question: Will the new post improve coordination on Indonesia’s downstream and energy transition agenda or simply add another layer of bureaucracy?

Bahlil was installed in his new post on Oct. 1 during the seventh reshuffle of President Prabowo Subianto’s cabinet and will fulfill the duties of his new office from the energy ministry for the time being. He described the dual role as a national responsibility, saying that downstream development and the energy transition needed to be consolidated to accelerate their implementation. According to Bahlil, around 90 percent of downstream investment was in sectors overseen by the energy ministry. He has declined to say whether a new appointee would eventually replace him as energy minister.

The choice of Bahlil is not entirely unexpected. Before heading the energy ministry, he was appointed investment and downstream minister after the portfolio was expanded from investment alone. He has also led the Downstream and Energy Security Acceleration Task Force since its establishment on Jan. 3 last year under Presidential Decree No. 1/2025, which grants it broad authority, including over marine and forest areas as well as to sanction parties obstructing downstream efforts. Bahlil’s new post therefore brings together areas that he has been closely involved in already.

The government has targeted downstream development across 28 commodities, with investment projected to reach US$618 billion by 2040.  The government's experience with downstream nickel projects illustrates both the scale of the agenda and the trade-offs involved. Downstream nickel development helped increase export value from $780 million in 2018 to $6.8 billion in 2023. At the same time, the rapid expansion of nickel processing contributed to the growth of captive coal capacity, which reached 15.2 gigawatts (GW) by mid-2024, complicating the country’s energy transition.

The downstream agenda also extends beyond mining and energy-intensive industries. In the poultry sector, for example, the government has sought to strengthen domestic production and local supply chains. Yet tighter import licensing under Trade Minister Regulation No. 11/2026 for soybean meal and feed wheat, both key poultry feed ingredients, contributed to supply bottlenecks and higher input costs. At the same time, weaker-than-expected demand from Prabowo’s flagship free nutritious meal (MBG) program left farmers squeezed between rising feed costs and falling egg prices, contributing to protests in Central Java, Yogyakarta and South Sulawesi in August.

The energy transition is the other major pillar of Bahlil’s expanded mandate. One of the government's most ambitious initiatives is a 100 gigawatt-peak (GWp) solar power program. Bahlil said on Sept. 22 that the government would revise state electricity firm PLN’s Electricity Supply Business Plan (RUPTL) to accommodate the program and was considering accelerating tenders for the first 25-30 GW. He also said the government could simplify the procurement process and directly appoint economically viable companies. The solar program is estimated to require $70-73 billion in investment, with its first phase of 5.5 GW already launched this year and domestic production given priority.

Critics have questioned whether creating another senior ministerial post is the best way to address coordination problems. A new institution could complicate government coordination and add to the fiscal burden, contrary to President Prabowo's efficiency agenda. Indonesia now has eight coordinating ministers and 41 ministries, while critics have pointed out that the total should range around 25-30 ministries. In comparison, Singapore has 18 ministries, China 24 and Vietnam 14.

Some also view new coordinating ministerial post as potentially serving as a mechanism for distributing political power, while warning that it could create bureaucratic inefficiencies because the energy and industry ministries already oversee much of the relevant policy areas.

Still others see potential value in the new structure. The new senior post could signal a stronger government commitment to accelerating the energy transition, downstream development and green industrialization, particularly through the 100 GWp solar program. However, its success would depend on the government's ability to resolve obstacles spanning multiple ministries.

Bahlil’s appointment could be intended to appoint a single figure with both the political authority and institutional experience to push the government’s downstream and energy transition agenda across ministerial boundaries. However, doubts still remain over whether creating a new coordinating ministerial post was necessary in the first place. Ultimately, Bahlil’s success in his new role will depend on whether he can resolve the coordination problems that existing institutions have struggled to address.