Indonesian Minister of Industry Airlangga Hartarto has visited South Korea to seek business deals and attract South Korean investors to Indonesia.
Indonesia is offering investment opportunities to South Korea for developing its industry outside Java, such as the Sei Mangkei Economic Zone in North Sumatra and the Morowali Industrial Park in Central Sulawesi.
“We are focusing on accelerating the development of industrial estates outside Java, as an effort to carry out equitable national economic development,” Airlangga noted in a written statement in Jakarta last Wednesday (July 5).
Based on the records of the Investment Coordinating Board, South Korea is the third-largest investor in Indonesia. In the manufacturing sector, South Korean companies contribute up to 71 percent of the total investment over the past five years amounting to US$7.5 billion.
The factories are able to absorb a workforce of 900 thousand people. Apart from the industrial areas, Airlangga also invited South Korean investors to boost the e-commerce business in Indonesia in order to spur the development of small and medium industries in the country.
Airlangga said South Koreas conglomerate Lotte is keen to change its main export destination from China to Indonesia due to high competition in the domestic Chinese market.
“We have also proposed that South Korean cosmetics companies can expand into Indonesia. For instance, for the packaging process,” he said.
In fact, Lotte is interested in doing business in the financial sector.
This can be achieved through the approval of the financial authority. It could be most easily realized through multi finance. We also offer them an opportunity at a startup level if they are keen to build a financial company, similar to Japanese firms, such as Softbank, according to the minister.
He said Indonesia is now intensively developing its industrial zones. The industrial area is included in the list of national strategic projects whose development will be accorded priority.
Airlangga made the remarks as a speaker while addressing the 8th Asian Leadership Conference bearing the theme of “Invest in Indonesia: Nation of Abundant Natural and Human Resources” in Seoul, South Korea.
The development of industrial estates, especially outside Java, has a significant role to accelerate the ideals of the government to realize equitable development in Indonesia.
Moreover, Indonesia has managed to achieve investment-grade rating or investment worthiness awarded by the international rating institution S&P.
“The government has prepared several areas to become new industrial centers. For instance, the industrial areas of Kuala Tanjung and Sei Mangkei that can attract investment for the region of Sumatra,” he explained.
The industrial areas of Morowali in Central Sulawesi and Bitung in North Sulawesi are expected to become industrial development zones for the Eastern region.
The Sei Mangkei industrial area covers 2,002 hectares (ha), with an investment of Rp9.5 trillion, and is focused on the development of the crude palm oil (CPO) processing industry.
Meanwhile, the industrial estate of Morowali sits on an area of 1,200 ha, with an investment of about Rp49.7 trillion. It is focused on the development of the ferronickel industry.
Airlangga assessed that the prospects of industrial development in Indonesia are still promising, as the demand for industrial land is increasing. To this end, industrial areas must be interconnected and integrated.
“Hence, industrial area operators must forge synergy with the local government in solving various problems that arise,” he explained.
The minister made assurances that if these efforts are well implemented, they can improve the competitiveness of industrial areas as well as have multiple impacts on the regional and national economy.
“In the next three years, we also encourage the accelerated development of industrial estates in Tanjung Buton, Tanah Kuning, Gresik, Kendal, and Serang,” he said.