Saturday, 23rd September 2017

Indonesia`s industrial zones await Japanese investment

11th July 2017 | 1.873 Views
Jakarta (ANTARA News) - Indonesia has continued to develop special industrial zones (KEKs) where it provides investment facilities to investors, including those coming from overseas.

Several regions in the country have proposed to the government to open KEKs to accelerate their economic development. Currently, the government has approved at least 11 KEKs, with a total investment of Rp221 trillion.

In order to further boost investment in the countrys KEKs, Indonesia is promoting the potential of its economic zones abroad to attract foreign investment.

After his trip to South Korea, Minister of Industry Airlangga Hartarto visited Japan to seek additional investment for the industrial sector in Indonesia.

"Yesterday, we met Jetro (Japan External Trade Organization) President as well as the board of directors of Sojitz Corporation. We invite them to continue to increase their investment in Indonesia," Hartarto said a written statement in Jakarta on Saturday (July 8).

Several industrial areas in Indonesia are open to receiving foreign investment, including from Japan.

Indonesia expects industries from Japan, such as those engaged in metal mineral processing, power generation, coal gasification, petrochemicals, and glass, to invest in the countrys industrial sites that have been readied.

The industrial estates, among others, comprise the Dumai industrial area in Riau Province that has a 50-megawatt capacity power plant, crude palm oil (CPO) terminal, and waste treatment facility. This area can be used for the development of coal and oleo chemical gasification industry.

Indonesia is also offering the Industri Java Integrated Industrial Port Estate (JIIPE). The JIIPE Industrial Estate in Gresik, East Java, has a total area of 2,933 hectares (ha) and is supported with 23-MW and 500-MW power plants. Equipped with residential areas and ports, the zone is designed as an area for heavy industry and machinery.

Furthermore, it offers the Kendal industrial area in Central Java, with an area of 2,700 ha, and is located adjacent to the port of Semarang.The furniture, food, and garment industries will be developed in this area.

"With competitive labor wages, this industrial area will have an advantage over other regions," Minister Hartarto pointed out.

He also offered the location of the Bontang industrial estate in East Kalimantan. According to Hartarto, this area will be developed for the coal gasification industry. Supported by an area of 265.6 ha, an oil and gas service industry is being built in the region.

Indonesia wants Japans existing industry in the country to strengthen its supply chain, so that it will help meet the need for domestic raw materials. Hence, an increase in investment is expected.

The country is not only pursuing capital investment from large-scale manufacturing companies but it is also expecting that increased economic cooperation with Japan will target the development of technology and innovation, human resources, and small and medium industries in the country.

"We explained that Indonesia has an immense market and business potential today," Minister Hartarto remarked.

The Indonesian government is committed to creating a conducive investment climate and offering ease of business through deregulation and packages of published economic policies.

"We are optimistic that the economy in Indonesia will improve this year, especially with the decline in the industrial gas prices and rising trend in commodity prices," he stated.

In the last six years, Japans total investment in Indonesia has reached US$19.7 billion. The number of Japanese companies in Indonesia to date has reached more than 1,750, with its business activities in manufacturing, infrastructure, and services sectors.

In 2016, the value of Japanese investment in Indonesia amounted to $5.4 billion, or an increase of 86 percent as compared to $2.9 billion in the previous year.

Some Japanese industries are quite active in investing in Indonesia, including in the automotive, metal, machinery, and electronics sectors.

In the meantime, during his visit to South Korea last week, Hartarto had sought to attract South Korean investors to expand their business to industrial areas outside Java, such as the Sei Mangkei Economic Zone in North Sumatra and the Morowali Industrial Park in Central Sulawesi.

"We are focusing on accelerating the development of industrial estates outside Java, as an effort to carry out equitable national economic development," Hartarto pointed out.

The development of industrial estates, especially outside Java, has a significant role in accelerating the ideals of the government to realize equitable development in Indonesia.

"The government has prepared several areas to become a new industrial center. For instance, the industrial areas of Kuala Tanjung and Sei Mangkei that can attract investment for the region of Sumatra," he explained.

The industrial area of Morowali in Central Sulawesi and Bitung in North Sulawesi are expected to become industrial development areas for the Eastern region.

Sei Mangkei industrial area covers 2,002 ha, with an investment of Rp9.5 trillion, and is focused on the development of the CPO processing industry.

Meanwhile, the industrial estate of Morowali sits on an area of 1,200 ha, with an investment of about Rp49.7 trillion. It focuses on the development of the ferronickel industry.

"In the next three years, we will also encourage the accelerated development of industrial estates in Tanjung Buton, Tanah Kuning, Gresik, Kendal, and Serang," he noted.

A total of 73 industrial zone companies are registered as members of the Industrial Zone Association, with a total area of 54,650.52 ha.

Based on records of the Investment Coordinating Board, South Korea is the third-largest investor in Indonesia.

In the manufacturing sector, South Korean companies have contributed up to 71 percent of the total investment over the past five years, amounting to $7.5 billion. In fact, the factories are able to absorb a workforce of 900 thousand people.

Indonesia is aware that South Koreas economic strength is innovation, and it has an Apple innovation center. Some companies are also interested in building an innovation center.

Hartarto said South Koreas conglomerate Lotte is keen to change its main export destination, no longer to China due to its high domestic product competition, but to Indonesia.

"We have also proposed that South Korean cosmetics companies can expand into Indonesia, for instance, for the packaging process," he added.(*)