Thursday, 5 February 2015


Growth industry was governed by safety factor, as well as convenience in investing. Therefore protection of national vital industry became an urgent matter. Data of the Ministry of Industry had it that industry was one of the most strategic propeller of development. Over the past 5 years, contribution of industry to GDP came close to 21% with average growth of 6% per year.

Unfortunately not all of the industrial estates were turned into national vital objects. Security was one of the main issues investors were concerned about. The industry that needed high protection were industrial estate of more than one thousand hectares wide in which there were foreign investors. For that matter the management of industrial estates had asked the Government and Police to step up security effort.

Moreover industrial estates had been designed by the Ministry of Industry as vital objects so they were entitled to good protection by the Police. Chairman of the Real Estate Association Sanny Iskandar stated in Jakarta on Friday [5/12] that investors were highly concerned about security. Sanny remarked that foreign investors might walk away from Indonesia if the place was considered as unsafe.

In principle, industrial estates must be comfortable and be well protected from demonstrators. As known, the Ministry of Industry had designated 49 companies and 14 industrial estates as national vital objects [OVNI]. By Ministrial Decree no 466 2014, the said industrial estates were entitled to sound police protection.

However, Sanny admitted that not all of the industrial estates were willing to be designated as national vital objects for fear of extra expenses due. Not all of the industrial estates management responded positively to the proposition as they had to procure extra facilities as standard procedure set by the Police.

Meanwhile the Director of Industrial Areas Expansion, Ministry of Industry, Imam Haryono projected demand for industrial estate was projected to be 3,353 hectares through 2015 – 2019. Total need for land plus infra structure etc. came to 4,790 hectares. The entire area needed for industrial estates through 2015 – 2035 came to 50,216 hectares.

The Ministry of Industry wished that industrial esates grew evenly and broadly spread to East Indonesia. Development in Western Indonesia was left  years behind Jakarta and in East Indonesia around 10 years behind Jakarta. To build industrial estates, the time needed was wrong 5 to 7 years from planning to management.

Imam believed that if the expansion of industrial estates was left to market mechanism there would be no foreign investors interested in exploring East of Indonesia. Therefore the Government was striving to facilitate by fiscal, non-fiscal or administration. The Ministry believed that incentives be given to foreign investors willing to invest in east of Indonesia instead of those who persisted to invest in Java.

As with OVNI, the Ministry made sure that they would not loosely give away OVNI certificates. There was pre-condition to it, i.e. industry must be categorized as strategic with benefits gor general public and national economic growth. The location must be strategic and of high investment value. (SS)

Business News - December 10, 2015

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