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Following reports of a large number of investments being made in Indonesia, are industrial estates ready to cope with this situation?

1. Based on a report by Badan Koordinasi Penanaman Modal (BKPM), 16 foreign companies intend to relocate their investment to Indonesia. How will industrial estates in Indonesia ready themselves to meet this realization, and what progress is being made towards this?

Regarding the readiness of industrial estates in facing this realization, many developers of industrial estates, and also the government, are currently at the stage of improvement. Regardless of the amount of investment that will enter Indonesia, the most important thing is the availability of land. In addition to the Batang Integrated Industrial Estate, which is one investment destination, there are various other industrial estates that will soon be available to the market. Likewise, there are several areas of land that can be potentially acquired and their function changed to become an industrial estate.

Developers need to make sure all the permits are ready, because with investors entering the market, there must be a noticeable improvement in this area. Developers need to ensure that preparations also include an established AMDAL and industrial estates permits, that a start has been made on infrastructure development and facilities, that electricity lines have been determined, WTP (Water Treatment Plant) and WWTP (Waste Water Treatment Plant) facilities needs are also clear, how much land will be cultivated eventually, and much more. It is important that these issues be addressed so that investors can feel confident in making their decisions.

With the current development of industrial estates presenting many options, it is important for investors to have sufficient knowledge to determine where they want to build a factory, warehouse, etc. The current sizeable government infrastructure development also opens up opportunities for investors to expand to various regions in Indonesia.

2. Apart from new investors, both foreign and domestic investors such as those from the consumer goods sector, have begun to dock and expand their factories. Thus, with regard to interest in factory and warehouse expansions in various regions of Indonesia, how positive are the signs for industrial estates in 2021?

Speaking on the matter with several companies that plan to expand, it is quite a good opportunity for industrial estates that are outside JABODETABEK (Jakarta, Bogor, Depok, Tangerang, Bekasi) or the island of Java. However, this may not happen in the near future, as the current global uncertainty is a factor, together with the readiness of the existing infrastructure. For now, it seems that existing industrial areas will still be the focus of expansion, plus around Patimban, Batang or even Kendal, Semarang.

However, the investment strategy outlined by the government also clearly refers to the expansion of industrial estates in the future. The condition of the industrial and logistics sectors is projected to be better this year compared to last year, although the improvement is not that significant. The entry of new industries, such as electric vehicles and batteries, represents a great opportunity for industrial estates in Indonesia to welcome various other types of industries.

3. Regarding the entry of new industries, such as electric vehicles and batteries, into the Indonesia market, how ready are industrial estates to welcome them?

The choice of industrial estates is various and diverse, but not all of them are suitable, and in-depth analysis is needed to assess them. Regardless of whether it is a new industry or not, the selection of a location is important, and several areas are being prepared by the government and also the private sector.

Apart from the specific readiness for new industries, there are other preparations, such as the existence of a Special Economic Zone in Kendal, for instance, then around Patimban and several other areas. There is also the potential for certain industries entering a special economic zone to receive a tax holiday.

It seems that the entry of electric vehicles and batteries to the market will become the new star for the industrial and logistics sector in Indonesia. However, consumer goods and e-commerce continue to expand, and data centers and cold storage facilities are still growing, as are various other industries.

By taking into account the potential and the opportunity, as well as several special measures being put into place by the government, the readiness of the industrial sector to welcome new industries looks positive. It provides tremendous opportunities for the industrial sector and the investment climate in Indonesia.

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Rivan Munansa

Director

Jakarta

Rivan has had over 20 years experience in real estate with expertise and knowledge not only in the industrial sector, but also in other property sectors.

As the head of Colliers’ Industrial Services Division in Jakarta, Indonesia, Rivan handles all lease and sale industrial transactions and real estate investments. Rivan has a track record of being appointed by local and multinational companies to represent their industrial requirements on both a local and regional basis.

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