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Indonesia Lures 7 Foreign Locators to Batang Industrial Estate, 17 More in Talks With Government

July 11, 2020, 12.23 PM

JAKARTA, – Seven investors from the US, Japan, Taiwan, and South Korea have decided to relocate their plants to Indonesia's Batang Integrated Industrial Estate in Central Java, with 17 more potential locators - all foreign investors - in talks with the government, said the Investment Coordinating Board (BKPM).

The industrial zone in Batang offers several advantages, including relatively low labor costs, access to the toll road, proximity to the port, and location next to railroad tracks, said BKPM head Bahlil Lahadalia.  

It’s an alternative offered by the government after the Brebes Industrial Estate, located about 80 kilometers west of the Batang Regency.

It also offers very competitive land prices to locators, said Bahlil.

"The price of a plot of land in the Batang industrial estate costs only 1 million rupiahs ($70) per meter." 

The seven companies that have decided on locating in Batang starting this month, partly due to the infrastructure in Central Java, are: PT Meiloon Technology Indonesia, PT Denso Indonesia, PT Sagami Indonesia, PT CDS Asia (Alpan), and PT Kenda Rubber Indonesia, PT Panasonic Manufacturing Indonesia, and PT LG Electronics Indonesia.

The investments total $850 million or around 11.9 trillion rupiahs, potentially creating 30,000 new jobs.

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Business news site Kontan reported that BKPM has done intensive negotiations to bring in the foreign investment into the country.

Bahlil said his office established a special task force to assist the relocation process. It oversees the company's licensing which is done at the relevant ministries, institutions, and the regional government.

"The process was very intensive. We went straight to knock on the company’s door one by one and assured them that Indonesia was the right place for their factory," Bahlil said.

"The challenges were extraordinary. But that's where BKPM had to be creative and responsive. We took the necessary approaches. And thank God there have been results at this early stage." 

Seventeen other investors have expressed interest in relocating or diversifying their industries to Indonesia. One of them is a South Korean investor, LG Chemicals, that plans to build an integrated industry for vehicle battery and a smelter. This LG Chemicals investment is estimated at $9.8 billion and is expected to provide job opportunities up to 14,000 workers.

"BKPM through its special task force for investment relocation is committed to assist the relocation process and continues to carry out negotiations with various companies to attract more investors who want to relocate their business to Indonesia," Bahlil said.

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Batang Industrial Estate is located strategically in the Batang Regency as it is near the Trans Java toll road and the railway from Jakarta to Surabaya as well as the Tanjung Emas Seaport in Semarang.

Years ago, this industrial estate area was associated with an eerie road known as Alas Roban. It is a major road that is part of the Pantura line which divides the forest in the regency. Car accidents often happened in the area due to its steep road and hilly terrain. But these accidents have been linked by many to mystical events.

To improve road safety, the government has already built a new lane for safe driving next to the old one.

No need to buy land

State-Owned Enterprises Minister (BUMN) Erick Thohir said foreign investors who want to invest in the Batang Integrated Industrial Zone (KIT) in Central Java do not need to buy land.

Investors, Erick added, can obtain a long-term lease.

"Through PTPN III [State-owned plantation holding PT Perkebunan Nusantara III], we will acquire land so that the entire land will be under the state-owned enterprises ministry and will facilitate the investors who come to invest in a long-term land lease," Erick said in a statement recently.

Later other state-owned companies will provide facilities at the Batang KIT, Erick added. For example, Perkebunan Nusantara and PTPN IX will provide land and process the conversion from HGU (right to use) to HPL (right to manage).

He went on to say that PT Pembangunan Perumahan and the Semarang-based PT Kawasan Industri Wijayakusuma will plan its master development, Pelindo III will manage the port and Pertamina will provide gas and fuel networks.

"With the President’s [Joko Widodo] direction to accelerate the development of the Batang Industrial Estate, the state-owned enterprises ministry will immediately work together with all relevant state companies and city-owned firms as well as the private sector," said the minister.

The development of the Batang Integrated Industrial Estate also aims to improve the economy in Central Java and to create a counterweight to industrial estates in Jakarta and Pasuruan in East Java.

It is also hoped that the industrial estate will be able to increase the regional minimum wage, which is still relatively low, and increase its human resources capacity.

The first phase of development of the Batang industrial estate is carried out on an area of 450 hectares and is expected to provide jobs to 30,000 people.

Meanwhile, state power firm PT PLN will prepare an electricity network. Currently, the Batang coal-fired power plant (PLTU) has a capacity of 2 x 1,000 megawatts and its solar power generator (PLTS) provides 50 megawatts.

“With fierce global economic competition in the time of Covid-19, Indonesia’s efforts to build a special industrial estate in Central Java such as in Batang is a means to increase competitiveness," he said.

( Miranti | Editor: Bambang Djatmiko, Muhammad Idris)


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