The industrial park will draw power from soon-to-be-operational hydropower and solar power plants, and will host producers of high-tech and precision products such as semiconductors, lithium-ion batteries, solar panels, industrial silicon and "green aluminum" – aluminum made using low-emission processes.

Investors from Indonesia, China and the United Arab Emirates (UAE) are behind this consortium, named PT Kalimantan Industrial Park Indonesia, led by Indonesian tycoon Garibaldi Thohir, who owns the land and who is president director of the country's second-largest coal producer PT Adaro Energy.

President Joko “Jokowi” Widodo said during a groundbreaking ceremony on Tuesday that the project would push commodity downstreaming in Indonesia, thus reducing the country's reliance on exported raw materials.

“We would no longer export raw materials, but semifinished or finished goods, and from North Kalimantan, nearly all finished goods to create added value,” he said.

Read also: Green, digital, downstream: Jokowi’s new economic strategy

The industrial park stands on 16,400 hectares of land and could expand up to 30,000 ha.

The government estimates the project will employ 100,000 workers during the construction phase, and between 50,000 and 60,000 during the operation phase. However, the figure could reach around 100,000 assuming tenant companies bring in their subsidiaries.

Jokowi instructed ministers to speed up the issuance of licenses and permits related to the project so it can attract more investors from more countries and become the largest park of its kind in the world.

“About permits; do not wait days or weeks. No. Issue them within hours. We will show that we are serious about developing this area. I do not want to hear about overdue permits or permits that haven't been completed,” Jokowi said.

Coordinating Maritime Affairs and Investment Minister Luhut Binsar Panjaitan said development in the area had been put on hold between 2015 and 2018 because of a disagreement between investors and power plants over who should begin development first.

Developers estimated that it would cost US$10 billion to 12 billion to build the hydro power plant and another $1 billion to develop ports near the industrial area.

“In late 2019, investors responded more seriously. They are now willing to build the [industrial park]; solar panels and coal-fired power plants for the first 10 to 15 years, during the period of the hydro power plant development,” Luhut said in the same press conference.

Luhut said at least 10 investors from China have committed to developing factories in the area. These investors have invested billions of dollars in downstream nickel projects in Indonesia over the last few years.

The government estimates that the park's energy demand would exceed supply from the hydro and solar power plants, which means it had to be selective with tenants.

Luhut said Garibaldi had helped negotiate with investors to get development going.

Read also: Recent floods in Kalimantan raises concerns over environmental damages

Garibaldi, also on Tuesday, said the project could help meet the growing global demand for green products, which has attracted many investors at home and abroad. 

He went on to say that by developing an aluminum smelter in the park, Indonesia could produce green aluminum, which is seeing growing global demand. A plan to build an electric vehicle (EV) battery factory will also help develop the country’s EV ecosystem, he added.

On top of developing the area, Garibaldi also promised to restore around 5,000 ha of mangrove in North Kalimantan.

“The development of this area would not only put Indonesia in the forefront of green product manufacture but also create jobs,” he said.

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