Government directing investors to industrial estates outside Java

Jakarta (ANTARA News) – Indonesia is directing foreign investors to invest in industrial areas outside Java in an effort to promote equality of economic development across the country.

Hence, in his tour of South Korea this week, Industry Minister Airlangga Hartarto 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,” said Minister of Industry Airlangga Hartarto in a written statement in Jakarta on Wednesday.

Moreover, the industrial area is included in the list of national strategic projects whose development will be accorded priority.

Airlangga made the remarks when as a speaker addressing the 8th Asian Leadership Conference with the theme of Invest in Indonesia: Nation of Abundant Natural and Human Resources, in Seoul, South Korea.

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

Moreover, Indonesia has managed to achieve investment grade rating or investment worthy given by international rating institution S&P.

“The government has prepared several areas to become a new industrial center, for example, 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 is expected to become industrial development area for the Eastern region.

Sei Mangkei industrial area covers 2,002 hectares (Ha) with an investment of Rp9.5 trillion and is focused on the development of crude palm oil (CPO) processing industry.

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

Airlangga assessed that the prospects of industrial development in Indonesia is still promising as the demand for industrial land is increasing. To that end, industrial areas must be interconnected and integrated.

“So industrial area operators must be in synergy with the local government in solving various problems that arise,” he explained.

Airlangga assured, if these efforts are well implemented, they can improve the competitiveness of industrial areas as well as bring multiple impacts on the regional and national economy.

“In the next three years, we also encourage the acceleration of industrial estate development in Tanjung Buton, Tanah Kuning, Gresik, Kendal and Serang,” he said.

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

“The industrial zone has successfully realized the operation of manufacturing industry where as many as 9,200 companies are able to absorb 3.68 million workers,” said Airlangga.

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

In the manufacturing sector, South Korean companies contribute up to 71 percent of the total investment over the past five years amounting to 7.5 billion US dollars. In fact, the factories are able to absorb the workforce as many as 900 thousand people.

On that occasion, Airlangga also invited South Korean investors to enliven e-commerce business in Indonesia, in order to spur the development of small and medium industries (IKM) in Indonesia.

“We have launched the IKM e-smart program, which faces the Industrial era,” Airlangga said.

He explained that his side has prepared four strategic steps so that Indonesia is ready to implement technology and innovation that support the fourth industrial revolution.

“First, the development of human resources through vocational school. Second, the utilization of digital technology to boost productivity and competitiveness for small and medium industries (IKM) through e-Smart IKM,” he said.

Third, the use of digital technologies such as Big Data, Autonomous Robots, Cybersecurity, Cloud, and Augmented Reality. Fourth, technological innovation through startup development by facilitating business incubation sites.

“We are aware that South Koreas economic strength is on innovation and we have an Apple innovation center and some companies are also interested to build an innovation center,” Airlangga said.

Airlangga said South Koreas Lotte investment wanted to change its main export destination, no longer to China because of its high domestic product competition, but to Indonesia.

“We have also proposed that South Korean cosmetics companies can expand into Indonesia, for example for the packaging process,” he said.

In fact, Lotte is interested to do business in the financial sector.

This can be done through the approval of the financial authority. It could be most easily through multi finance. We also offer them to take a chance at startup if they want to build a financial company, like Japanese companies, such as Softbank,” he said

In an effort to support industrialization in Indonesia, according to Airlangga, the Ministry of Industry is actively building vocational education with link and match concept Between the industry players and Vocational High School (SMK).

“Indonesia is currently and up to 10 years old will still enjoy its demographic bonus, where the majority of the population is at productive age,” He said.

Therefore, Ministry of Industry has cooperated with 117 companies to sign Cooperation agreement with 389 SMKs in an effort to run an industrial vocational education program in Central Java and Yogyakarta.

This program is a continuation of what has been launched in Mojokerto on February 28, 2017 involving 50 companies and 234 vocational schools in East Java.

“The industrial vocational education program will be launched gradually, in the provinces of West Java, Jakarta and Banten, as well as in Sumatra and other parts of Indonesia,” Airlangga said.

In the period 2017-2019, the Ministry of Industry designed a number of activities to prepare a certified industrial workforce of 1040,552 people.

In addition to coaching and development of SMKs that link and match with industry, 3in1 (training-certification-job placement) training, apprenticeship industry, and competency certification program is also implemented.

Implementation of these programs is collaborated with various relevant stakeholders such as the Indonesian Chamber of Commerce and Industry (Kadin), the Ministry of Research and Technology and Higher Education and Ministry of Manpower.

Source: Antara News