Indonesia is currently in talks with the US government on the potential relocation of American companies operating in China to the country. According to media report, about 20 companies have expressed interest in relocating factories to Indonesia.
To attract these companies, the Indonesian government is allocating slots in its industrial parks, such as Kendal and Brebes Industrial Park located in Central Java. The 4,000-hectare Brebes industrial park is in the construction phase and the government will use a law to obtain the land cheaply and offer low rents to the tenants. The park is located around 270 kilometers from Jakarta and has a road link to the capital and two nearby ports. Kendal and Brebes are also chosen because they have low minimum wage of about USD 135 a month.
Besides pushing for the development of industrial parks, the government is also in the process of enacting an ‘omnibus’ Bill to address concerns from foreign investors in areas of overlapping regulations and improving the investment climate. Bureaucratic hurdles, rigid labor laws, and inadequate infrastructure have hindered the country from benefiting from manufacturers’ quest for geographical diversification of production bases.
In recent years, Indonesia has seen an increase in foreign investment, from the resources, tech and sectors such as warehousing and logistics. The country is now looking to boost its attractiveness in the manufacturing sector, against other neighboring countries, such as Vietnam, Malaysia, Thailand and Cambodia.
(Sources: ChannelNews Asia; Nikkei Asian Review; Eurasian Times)