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Jokowi proposes exclusive German industrial area in C. Java
Germany invested $1.4 trillion in Indonesia in 2020, making it the fourth-largest European investor after the Netherlands, Luxembourg and the United Kingdom.
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resident Joko “Jokowi” Widodo has offered to open, within the Batang Integrated Industrial Park in Central Java, an area designated for German companies as Indonesia seeks to woo new foreign investors.
Jokowi extended the offer to German Chancellor Angela Merkel during a closed-door virtual meeting on Tuesday, a day after the two leaders opened the German-based Hannover Messe 2021 trade fair, in which Indonesia is a partner country.
“I am offering Germany the opportunity to develop a German industrial quarter in the Batang integrated industrial zone,” Jokowi said in a statement, without providing further details.
He urged Germany, a European industrial powerhouse, to increase industrial investments in Indonesia by building factories and by integrating Indonesia into its global supply chain. He also suggested forming a partnership to develop vocational schools in improving Indonesia’s human resources.
The Jokowi administration is on a campaign to get foreign companies to invest in and relocate to Indonesia as the country’s foreign direct investments (FDI) dropped by 2.4 percent year-on-year (yoy) to Rp 412.8 trillion (US$28.24 billion) in 2020, according to Investment Coordinating Board (BKPM) data.
The Batang industrial zone is among the government’s tools to attract such factories. The zone will sit on 4,368 hectares of land owned by state-owned plantation holding company PT Perkebunan Nusantara (PTPN) IX in Gringsing district, Batang regency.
“We will gladly follow up on this matter together with the German business community. So far, there are no further details known,” a German Embassy spokesperson told The Jakarta Post on Thursday.
Indonesian officials have pitched Batang’s relatively low minimum wages and the ease by which the government could provide land for factories as the main advantages of relocating to the industrial zone.
However, a shortage of skilled labor in lesser developed regencies risks deterring investment despite the lower wages, economists say.
Read also: What you need to know about Batang industrial zone development
Germany invested $1.4 trillion in Indonesia in 2020, making it the fourth-largest European investor after the Netherlands, Luxembourg and the United Kingdom, BKPM data shows.
Big German manufacturers with offices in Indonesia include auto supplier Bosch, pharmaceutical maker Bayer, industrial manufacturer Siemens, stationary producer Staedtler and automaker BMW.
Meanwhile, Germany was also Indonesia’s top trading partner in Europe. Last year, trade between two countries reached $5.48 billion, according to Trade Ministry data.
Indonesia and Germany have a comprehensive partnership agreement under the 2012 German-Indonesian Joint Declaration for a Comprehensive Partnership that includes economic, education, research and technology cooperation, among other areas.
Jokowi and Merkel also discussed partnerships in the climate change, economic and health sectors, as well as highlighted the current political situation in Myanmar.
Read also: Indonesia eyes unmissable opportunities at Hannover trade fair
More than 160 Indonesian companies from all sectors of business will participate in Hannover Messe 2021 to look for business partners, export markets, new technologies and opportunities to grow
“It is an honor for Indonesia to be chosen as the partner country for the Hannover fair in 2021 and again in 2023,” Jokowi said.
