Thursday, 9 January 2014


The government is committed to continue developing industrial estates in various provinces, especially outside Java. Dedi Mulyadi, Director General of Industrial Zoning Development of the Ministry of Industry, in Jakarta (Monday, December 23), explained that in Sulawesi, the government is working with China to develop industrial estates in three regions, namely Morowali (Central Sulawesi), Bantaeng (South Sulawesi) and North Konawe (Southeast Sulawesi).

According to him, industrial estate is still concentrated in Java which reached 74%. In fact, natural resources are spreading outside Java so his party continues its efforts to spur industry growth outside Java. Dedi also expects that there will be investors who are interested to invest in industrial development outside Java. “We would like to develop an industrial area outside Java, because of its growth potential is very huge”, Dedi said.

He said that the development of industrial estates, particularly for small and medium industries (SMEs), should also reach the island outside Java. Until now, SMEs are still concentrated in Java with a percentage of 75%. He was aware that the development of SMEs outside Java is still hampered by some major obstacles, namely infrastructure problem. However, these obstacles must be overcome so that competition among SMEs is more competitive. The government, he said, is also intensifying competitiveness improvement program, including overcoming infrastructure problems.

He mentioned that some of the strategic plan that has been prepared is SME cluster development, entrepreneurship development, machinery and equipment restructuring, as well as development of extension agents. He said there were seven commodities to be developed in the strategic plan, namely snacks, essential oil, pottery or decorative ceramics, precious stones and jewelry, fashion, crafts, and salt produced by small-scale businesses.

Meanwhile, Chairman of Industrial Estate Association (HKI), Sanny Iskandar, said that land intended for industrial areas outside Java is still very minimal. According to him, more than 50% of the land for the industrial areas has not been utilized. Minimal development was especially true in Riau, Bangka Belitung, Central Sulawesi, South Sulawesi and East Kalimantan. This, he said, is caused by lack of infrastructure. In addition, there is no clarity regarding the designation of core product or mainstay that becomes industry base in the region concerned.

Sanny said that industrial park growth is always slower than growth of demand for land in the last three years. According to him, Indonesia’s positive economic growth triggers high demand. But the growth is not balanced with development of new industrial areas. “This is our challenge in the future”, he said.

Sanny said that regarding the comparison between the growth of demand for land and industrial areas in the last three years, demand is higher than supply. HKI highlighted several things that cause difficulty in the development of new industries. First, land acquisition process. In addition, for industrial areas outside Java, the infrastructure is still minimal so it is difficult to develop industry in a short time.

Growth of industrial area is lower than growth of demand, he said, but does not immediately make investors cancel their intention to invest in Indonesia. The impact is more on the postponement of investment realization. He gave an example of factory construction, which should be completed sooner, but was delayed. Production process can be delayed 3-5 years and the potential loss is definitely not small. 

Business News - December 27, 2013

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