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Korean firms pushed to invest outside Greater Jakarta
In an attempt to help narrow the development gap in the country, the government is encouraging investors from South Korea to consider investing in projects outside Greater Jakarta and even outside the main island of Java
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n an attempt to help narrow the development gap in the country, the government is encouraging investors from South Korea to consider investing in projects outside Greater Jakarta and even outside the main island of Java.
Investment Coordinating Board (BKPM) chairman Mahendra Siregar said on Thursday the capital and its satellite cities could not handle new large factories as space was too scarce.
Mahendra said that about 80 percent of investments from South Korea to Indonesia last year were directed to Jakarta, Bogor, Depok, Tangerang and Bekasi (Jabodetabek) and Karawang areas.
'I hope Korean investors will see alternatives outside Jakarta in the near and mid-term period, for example to East and Central Java, where economic growth is above the national average and local government is willing to discuss a better wage system,' Mahendra said.
Mahendra was speaking after wrapping up a three-day-visit to meet dozens of South Korean businessmen. South Korea is currently the third-largest foreign investor in Indonesia and its number of investments has grown rapidly in the last few years.
Java has long been the center of development in Indonesia, while other regions have lagged behind, especially in infrastructure.
There are currently a number of industrial estate projects in the country, including the Kawasan Ekonomi Khusus (KEK) in Sei Mangke, Sumatra and in Gresik, East Java.
The developer of the industrial estate in Gresik is Jakarta-listed PT AKR Corporindo and PT Pelabuhan Indonesia III (Pelindo III). AKR also presented during BKPM's visit to South Korea.
AKR Corporindo president director Haryanto Adikoesoemo said several South Korean companies were interested in his company's project. However, he said a decision to become tenants in the integrated industrial compound, which is called Java Integrated Industrial Port Estate (JIIPE), would take some time.
'In April, they want to come see the location. They are familiar with industrial areas in West Java but not in East Java. That's why they want to see. East Java is the most prepared area because it already has an international airport, international schools and other facilities,' Haryanto said.
The JIIPE development project, which also includes the development of a port, needs Rp 6 trillion in investment, according to Haryanto. The total area covered is 1,800 hectares. In the first stage of development, construction on the port and 750-hectare plot of land are expected to be completed by the year end.
