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All Journal Journal Research of Social Science, Economics, and Management
Sandy Akbar Nusantara
Institut Teknologi Bandung
Environmental Science

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From Leaf to Extract: A Cost-Benefit and Input-Output Assessment of Kratom Down streaming in Indonesia Sandy Akbar Nusantara; Raden Aswin Rahadi
Journal Research of Social Science, Economics, and Management Vol. 5 No. 12 (2026): Journal Research of Social Science, Economics, and Management
Publisher : Publikasi Indonesia

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.59141/jrssem.v5i12.1529

Abstract

Indonesia is one of the world's largest producers of kratom (Mitragyna speciosa), yet it captures only a small share of the value generated along the global kratom value chain. The enactment of Permendag 20/2024 and 21/2024 in October 2024, which prohibits raw kratom leaf exports and mandates processed-form exports, has created both an obligation and an opportunity to move downstream into high-purity extraction. This study assesses the financial feasibility and macroeconomic impact of producing fifty-percent mitragynine extract at a commercial scale of one hundred kilograms per month, using the case of PT MIT as the unit of analysis. An integrated framework combining a firm-level Cost-Benefit Analysis with an Input-Output Analysis is applied, grounded in validated pilot operational data and the 2020 Indonesian Input-Output Table. Three scenarios distinguished by capacity utilization of seventy-five, eighty-five, and ninety-three percent are evaluated at a fifteen-percent discount rate. The financial results indicate strong viability: the base case yields a net present value of Rp 11.80 billion, an internal rate of return of 37.59 percent, a profitability index of 2.31, and a discounted payback of 4.88 years. The macroeconomic results show that the pharmaceutical sector to which kratom extraction is mapped functions as a strong demand-pull sector, generating total economy-wide output of Rp 48.37 billion, supporting around ninety-three jobs, and contributing foreign exchange of USD 1.53 million per year. The study demonstrates that domestic down streaming aligns private profitability with national economic benefit.
Co-Authors Raden Aswin Rahadi