Kendal Industrial Estate: 50 investors guaranteed to join

This article has been translated by PwC Indonesia as part of our Indonesia Infrastructure News Service. PwC Indonesia has not checked the accuracy of, and accepts no responsibility for the content.

Bisnis Indonesia - Kawasan Industri Kendal: 50 Investor Dipastikan Masuk

11 January 2019

By Yadi Supriyatno

 

Kendal — Kendal Industrial Park or Kendal Industrial Estate has secured a total of 50 investors or tenants who will build factories in the area until January this year. The certainty has increased an overall investment value in the area to Rp7.3 trillion.

President Director & CEO of Kendal Industrial Park Stanley Ang pointed out the number of foreign companies interested in investing in this area has been growing since the second half of 2018, such as China and South Korea.

Furthermore, he continued, tenants with new investments are also larger in number compared to the relocation or expansion in 2018. According to him, tenants who make new investment account for around 60%.

“[50 tenants] have confirmed, [they] have inked [an agreement] with us. Financially, they have made a commitment,” said Stanley in Kendal, Thursday (10/1).

Of the total 50 tenants who have expressed their commitment to build factories in the area, as many as seven tenants have begun operation. Three tenants are in the construction process, and the remaining 12 tenants are in the process of obtaining permit, preparing design, and working on other necessities.

Some investors who have expressed their commitment, he revealed, are still working on their internal process. There are not many investors who have kicked off the construction due to several factors, such as rupiah depreciation against US dollar which makes investors decide to wait and see the condition.

Then, the state of global economy with trade dispute between China and the United States also poses concern to investors. Meanwhile, for domestic investors, the political year still dominate their reasons.

Therefore, Stanley predicted that the tenants will accelerate construction after the general election or in the second half of this year.

According to him, local investors for the time being still make the majority of contribution of around 85%, followed by investors from Singapore as much as 7%, South Korea 2%, Japan 2%, and Malaysia 2%.

The companies which have agreed to invest in Kendal Industrial Park are engaged in a different range of sectors, such as textile, food, steel, furniture, and cable.

Pertaining to facilities, he said facilities such as electricity availability for the current condition with 50 tenants are still sufficient.

However, Stanley reckoned that the construction of electrical facility is necessary to make sure tenants’ operation goes smoothly. He said currently his office is having a discussion on the electrical facility and mapping it out.

“So, we’re in the process of mapping it out, whether they want to build it themselves, whether it will be suitable, or whether we should find an alternative, we also plan to make use of green energy,” he said.

Industry Minister Airlangga Hartanto disclosed Central Java is the most attractive area for investors with the completion of Trans-Java toll road and increased investment in ports will lead to ever-growing industrial estates.

Stanley explained workforce issue can be solved because new jobs will be created. The Industry Ministry attempts to produce skilled and innovative workforce to improve the competitiveness of the domestic furniture industry.

To achieve the goal, the Industry Ministry has facilitated the construction of Furniture Industry and Wood Processing Polytechnic in Kendal Industrial Estate.

“The presence of Furniture Industry Polytechnic should be able to meet the current challenge of furniture industry development and market trend. Moreover, furniture industry is a sector that is based on life style,” said Airlangga.

He added the industry needs creativity and innovation of product designs which can meet the current market interest to make it more competitive even in the global market. Therefore, the furniture industry must be able to create and meet market needs simultaneously.

Stanley warmly welcomed the implementation of education system with 70% practice and 30% theory in Furniture Industry and Wood Processing Polytechnic.

“The dual system concept which was developed in Swiss is said to be able to produce graduates suitable for future needs, especially ahead of the industry 4.0 era,” he said.

The Industry Ministry wants to keep boosting furniture export performance from Indonesia to several countries. The trade balance of national furniture products posts a surplus of US$99.1 million with an export value touching US$1.4 billion within the period of January – October 2018.

Industry Minister Airlangga Hartanto pointed out furniture industry is one of the strategic sectors in supporting national economy due to its labour-intensive and export-oriented nature.

“We’re determined to continuously improve furniture export performance. Moreover, we have the potential for raw materials, given that Indonesia is one of the 10 countries in the world with the largest forest area covering 46.46% of Indonesia territory,” he said.

He explained the government attempts to optimise national furniture industry potential through some policies, such as production technical guidance program, Timber Legality Verification System (SVLK), promotion and market access development.

Furthermore, it will be supported by competent furniture industry human resources through establishment of Furniture Industry Polytechnic in Kendal Industrial Park. Central Java Province is one of the basis for furniture industry which can contribute up to 57% of the total national furniture export.

“With an increased national export target of up to US$5 billion, it is predicted that the needs for furniture workforce especially in Central Java will increase by 101,346 people in the next two years,” he said.

Boosting Tourism Sector

In other development, Central Java Provincial Government intensely boosts the tourism sector this year by relying on various attractive tourism destinations and attractions. In 2019 Central Java Provincial Government sets a target of 1.2 million foreign tourist visits.

Head of Central Java Regional House of Representatives (DPRD) Rukma Setyabudi pointed out that currently the tourism sector in every regency/municipality is already developed. The development, he continued, will really help improve regional economic growth.

The larger the number of visiting tourists is, the more small enterprises will grow. As an example, he mentioned about Semarang City which has seen an increase in tourist visits due to the appearance of several new tourist attractions, such as the bridge fountain (fountain water dancing along a bridge). The fountain once went viral on social media, thus attracting tourists to visit Semarang City.

“For the size of Semarang, it’s already very good. It’s hoped other regencies/municipalities can follow its step so they can won tourists’ interest,” said Rukma, Thursday (10/1).

Rukma explained a large number of tourists visiting Semarang is also propelled by the infrastructure such as toll roads.

According to him, the access to Semarang is very comfortable with Pemalang – Batang and Semarang – Solo toll roads. “Now the access is already much faster because Batang Toll Road is already completed. Therefore, the infrastructure highly supports the tourism industry in the region,” he said.

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