Chairman of the National Economic Council (DEN), Luhut Binsar Pandjaitan, is proposing a new downstreaming initiative focused on frankincense, aiming to maximize Indonesia’s role in the global value chain of this high-demand commodity. 

Speaking at the International Conference on Infrastructure on Thursday, June 12, 2025, Luhut emphasized the significant potential of processing frankincense into high-value products, such as perfumes and aromatherapy oils.

Indonesia currently supplies 80 percent of the raw materials for global frankincense-based industries, but most of it is exported in unprocessed form. Luhut highlighted that while Indonesia's frankincense export value grew by 5.3 percent year-on-year to US$52.51 million (Rp700 billion) in 2023, the total global market for frankincense-based products reached US$23 billion during the same period.

“There are so many downstream products from frankincense. The market size is US$23 billion,” Luhut said. “Frankincense oil alone offers up to 350 times added value.”

However, to achieve this vision, Luhut underscored the urgent need for land connectivity infrastructure, particularly to access domestic frankincense-producing regions, which are often remote and difficult to reach. He cited the Lake Toba region in North Sumatra as one such area.

“Currently, there are 75,000 frankincense trees in the area, which can produce up to 75 tons of frankincense oil annually,” he noted. “Once again, we need infrastructure like toll roads and other basic facilities to enable this downstreaming program.”

According to Luhut, the majority of Indonesia’s frankincense exports − 42.9 percent − are destined for India, followed by 13.7 percent to Vietnam and 9.1 percent to China. Last year’s total frankincense oil export volume stood at 43,100 tons.

The initiative aligns with Indonesia’s broader food and agriculture downstreaming agenda. Earlier, Minister of Agriculture Amran Sulaiman revealed an investment opportunity of Rp802.58 trillion across 11 key agricultural commodities. In the first phase, the government is prioritizing seven of them − garlic, cassava, palm oil, coconut, sugarcane, palm sugar, and beef − with an estimated investment value of around Rp460 trillion.

Amran said the goal is to reduce imports of goods that can be produced domestically while increasing the value-added potential of export-oriented agricultural products.

“The food downstreaming program will improve public welfare, save foreign exchange, and stimulate regional economic activity,” Amran said in March 2025.