Thursday, 4 July 2013

INVESTOR INTEREST IN INDUSTRIAL ZONE IS STILL LOW



Development of industrial zones, both in Java and outside Java, becomes one of the priority policies of the Government. Industrial parks are being built as one of the priority policies of the Government is the industrial sector. There are seven major infrastructures that must be prepared to build an industrial area, i.e. electricity, water, gas, labor, access roads, airports and ports. Currently, Jababeka is one area that already has a complete infrastructure for an industrial park and will be expanded to other areas outside Java.
               
However, the government’s efforts seem not to produce maximum results. Evidently, investors’ interest to invest in the industrial parks is still relatively low. The Ministry of Industry judges that construction and development of industrial estates in the regions are still constrained by investment. During this time, regional government’s desire to develop industrial center in each region is quite large, but it is still hampered by investors who want to invest. In fact, the development of industrial centers must be done in order to encourage the growth of national industry.
               
Director General of Industrial Zoning Development at the Ministry of Industry, Dedy Mulyadi, Tuesday (4/16) said that development of industrial area needs a very large amount of funds and involves investors from within and outside the country. He pointed out that to construct an industrial area; it takes a minimum of 1,000 hectares of land, including the supporting infrastructure. In fact, the 1, 000 hectare land area has to be coupled with around 200,000 – 300,000 square meters to build public facilities in the industrial environment. In order for the development of an integrated industrial park to be realized, government in the region should be able to woo big investors and has substantial funds. “In fact, we have not been able to attract more investors to the industrial park”, Dedy said.
                 
Dedy acknowledged that the role of the Indonesia government in the development of industrial lands in minimal compared to the role of the private sector. One of the consequences is that it is difficult to regulate the stability of land price increases that often weigh on investors when it entered into the industrial area. It is said that on condition of the market mechanism, it is difficult for the government o fully regulate the price of land in the industrial park because it is related to supply and demand.
               
Pattern of development of industrial areas in Indonesia, which is currently 6%, is done by the government and 94% by the private sector. This condition is different from some other Asian countries. In comparison, 78% of industrial estate development in Malaysia is done by the government and 22% by private. In Japan, the proportion is 85% government and 15% private, and South Korea 70% government and 30% private. The percentage stated contribution in the form of capital investment. According to Dedy, development of new industrial areas should be encouraged, both in the economic corridor of Java, Sumatera, Kalimantan, Sulawesi, and in the economic corridor of Papua and Maluku islands.
               
Projected demand for land is 12.5 hectares of industrial area for investment worth Rp1 trillion. This projection is based on data in 2011, when the industrial park land sales reached 1, 247.84 hectares while the total foreign and domestic investments in the industrial sector valued at Rp99.64 trillion. Total land area of the remaining industrial estates until now is 7,911.98 hectares. While the projected needs of the industrial park land in 2013 covers an area of accompany investment entry in 2014 is projected at 2,847.10 hectare, and in 2015 an area of 3,416.53 hectare.(E)


Business News - April 19,2013

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