For the next 5 years the need for industrial land was estimated at 5,000 hectares followed by areal expansion outside Java. Presumably each year the need was between 500 – 1,000 hectares of land. The realization would soon exceed the estimate or probably even below that. Land expansion was not only governed by investment growth. Government projects, especially those outside Java, was also contributing factor.
Sanny Iskandar, Chairman of the Indonesia Industrial Estate [HKI] stated in Jakarta on Tuesday [7/10] that demand for industrial land was growing with increasing zest of investors to build factories in Indonesia. However investors were still concentrated in Bekasi and Karawang due to lack of infra-structure in other areas. According to HKI data the need here was around 600 hectares or 60% of total annual need the rest was spread out in other industrial zones from Sumatra Sulawesi.
HKI data had it that total land area of industrial estate in all of Indonesia came to 27,320.66 Ha up to June 2012. By the rule, developers of the industrial area must build maximum 70% of total land area. 30% of land area must be used for infra structures open spaces and other facilities.
Meaning developers must build industrial zones maximum 19,124.4 Ha. The land occupied by mid year came to 11,212.48 ha or 58.6% of total land permitted for building. Hence Indonesia was rated as commanding over industrial land covering 7,911.48 ha ready to be marketed to companies.
Sanny predicted that increasing investment caused the need for industrial space 2019 to reach 5,000 Ha followed by land expansion outside Java. He disclosed that although ready-to-use land was wide enough in some regions, some investors were still hesitant to use them due to handicap in infra structure. He rated that infra structure was still the main problem in expansion of industrial areas in some regions especially outside Java.
Meanwhile BKPM noted that investment trend from 2010 to June 2014 showed that Java was the most fertile. The area outside Java was stormed by foreign or local investors in East Kalimantan, South Kalimantan, and Papua. In 2013, domestic investment in East Java was 27.2%, East Kalimantan [12.4%], Central Java [9.8%], West Java [7%], and South Kalimantan 6,5%.
In Semester I this year the portion of Domestic Investment in East Java was equal to 25% national, the rest being West Java [14.5%], Jakarta [11.4%], Central Java [10.6%]. East Kalimantan [8.6%]. In case of foreign investment [PMA] last year West Java had 24.9%, and Papua 8.2%. in Semester I/2014 investment flew in to West Java [22.6%], Jakarta [14.7%], East Kalimantan [10.5%], Banten [7,5%] and East Java [6.8%].
Sanny stated that increased demand for industrial land in the past 3 years was in line with industrial expansion of that period. The trend of increased demand for land would only happen again in the next 3 years. The economic climate in Indonesia today contribute to lessening demand for industrial land in semester II.
Sanny remarked further that the Presidential election process caused investors to take wait and see stance toward formation of cabinet as related to the Government new policy on industry” Sanny said. (SS)
Business New - October 10, 2014