Good infrastructure no longer enough to attract new tenants<\/p>\n
I. Christianto, Contributor, Jakarta<\/p>\n
Searching for a site for a factory or plant involves a mix of
\ncorporate strategy, business consideration and other factors,
\nwhich may or may not relate to commercial considerations.<\/p>\n
For example, existing infrastructure, the supply of raw
\nmaterials, housing for employees or the distance to a golf course
\nare all factors that will help lead an investor to select a
\nparticular area for a factory.<\/p>\n
Industrial estates in Indonesia, particularly those in Jakarta
\nand the surrounding areas of Bogor, Bekasi, Tangerang, Serang and
\nKarawang are making their utmost efforts to attract tenants amid
\nthe continued sluggish demand.<\/p>\n
Competition is growing, though it is no longer focused on
\ninfrastructure but more on value-added services such as
\nconvenience and security.<\/p>\n
For example, Suryacipta Swadaya, which operates a 1,400-
\nhectare industrial estate in Karawang, promises efficient and
\nhassle-free industrial establishment in addition to well-
\ndeveloped infrastructure.<\/p>\n
\"As all sites on our industrial estate possess genuine land
\ntitles, no land acquisition or location permits are required for
\nnew factories,\" said Karel Walla, Suryacipta's director for
\nestate management and development.<\/p>\n
He said the estate's well-established infrastructure
\nguarantees reliability and convenience for its tenants.<\/p>\n
Lippo Cikarang, one of the country's largest and most-
\ncomprehensive urban-cum-industrial developments, also provides
\nhigh standards, environmentally friendly facilities and
\ninfrastructure to investors.<\/p>\n
To meet the growing demand from investors, Lippo Cikarang have
\nlaunched three industrial estates including Delta Silicon, which
\noffers industrial plots from 3,000 square meters up to 10
\nhectares, Delta Technology Center, which features ready-built
\nfactories, and Multiguna Niaga, which offers smaller-sized ready-
\nmade factories.<\/p>\n
Like the two major industrial estate developers, Jababeka,
\nwhich operates a 2,970-hectare industrial plot also in Cikarang,
\nand Bekasi, it not only offers adequate infrastructure facilities
\nbut also promises a convenient plant for investors and workers
\nliving in the area.<\/p>\n
Agus Canny of PT Kawasan Industri Jababeka said that in the
\nfirst five to seven years of operating, his company found
\ninfrastructure was the major concern for prospective tenants.<\/p>\n
But he said that as good infrastructure facilities have become
\nthe standard requirement, an industrial estate developer should
\nbe able to provide other incentives to win the hearts of
\ninvestors.<\/p>\n
\"Competition focuses more on 'software', not on 'hardware'
\nanymore. To a certain extent, anchor tenants will also be given
\nthe competitive edge at industrial parks,\" he said.<\/p>\n
According to Agus, Jababeka always tries to provide a good
\nbusiness climate for both existing and new tenants.<\/p>\n
There are at least 40 industrial parks covering 20,000
\nhectares along the Jakarta to Cikampek toll road, and another 40
\nindustrial estates covering 8,600 hectares in the Jakarta to
\nSerang area.<\/p>\n
Investors and industrialists are also familiar with Cilandak
\nCommercial Estate, Pulo Gadung, Pluit Distribution Center,
\nKawasan Berikat Nusantara, Balaraja Industrial Park, Taman Tekno
\nBumi Serpong Damai, Cipta Cakra or Krakatau Industrial Estate.<\/p>\n
Some of the industrial parks have stopped marketing because
\nthey claim they are fully occupied. There are also new projects
\nunder construction.<\/p>\n
Although there are indications of an improvement in business
\nconfidence in the country, the construction of new factories
\nremains at a low level.<\/p>\n
Property consultant PT Procon Indah said the lack of
\nimprovement in the general political situation along with the
\nperceived legal uncertainties for foreign investments in
\nIndonesia would continue to hamper demand for space on industrial
\nestates.<\/p>\n
The consultant said demand for large industrial land
\nplots was expected to remain weak, and as a result, an increase
\nin the price of land in the primary market was unlikely in the
\nshort term.<\/p>\n
Continuing negative sentiment among foreign investors
\nin the country had impeded property demands. The level of foreign
\ndirect investment approvals in the first five months of the year
\nplunged to US$1.67 billion, 60 percent lower than the total level
\nof foreign investment approvals last year.<\/p>\n
Security problems, labor conflicts and a weak legal system
\nhave discouraged foreign investors from returning to the country.<\/p>\n
In its latest report, Procon said there was no new supply
\nentering the industrial estate market in Greater Jakarta during
\nthe second quarter of this year, with the total cumulative supply
\nremaining at 6,469 hectares.<\/p>\n
The future supply of industrial land in 2002 and 2003 is
\nexpected to come from four projects, Cikupamas 2 (Tangerang),
\nDelta Silicon 2 in Lippo Cikarang (Bekasi), KBN Marunda (Jakarta)
\nand Techpark Cikarang (Bekasi), and will add 104 hectares in 2002
\nand 150 hectares in 2003.<\/p>\n
Take-up in the second quarter reached 9.9 hectares, which was
\nonly 2 percent higher than the same period last year and about 29
\npercent lower than the last quarter. The cumulative sales rate
\nimproved slightly to 71.8 percent.<\/p>\n
Procon said all the land transactions were of relatively
\nsmall-sized premises (1,000 square-meters to 12,000 square-
\nmeters), and most were made by local investors.<\/p>\n
The average price of industrial land, in rupiah terms,
\nslightly decreased by 1 percent to Rp 315,000 per square-meter,
\nsaid Procon. As a result of the rupiah strengthening against the
\nU.S. dollar by 10.6 percent over the reviewed quarter, the dollar
\nprice rose by 9.5 percent from US$33 per square meter
\nto $36.1 per square meter.<\/p>\n
The average base rent of industrial buildings remained
\nunchanged from the last quarter, ranging from between Rp 10,000
\nand Rp 22,500 per square meter.<\/p>",
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