Political uncertainty leads investors to shun industrial estates<\/p>\n
SURABAYA (JP): The prolonged economic crisis, worsened by
\nprotracted political uncertainty, has lead the business climate
\ninto a dark state. It has also affected business in industrial
\nestates which require interrelated and complex management and a
\nsolid marketing strategy.<\/p>\n
Attracting investors means initiating strategy, while
\nsoliciting them to join the industrial zones takes more strategy.<\/p>\n
The current status of industrial estates in East Java, which
\nare far from Jakarta's political hustle and bustle, is of no
\nexception.<\/p>\n
\"All prospective investors interested in investing in East
\nJava have canceled their plans. They have now adopted a wait-and-
\nsee stance. However, the provincial industrial estates are
\noffering relatively good business prospects and are providing
\nproper facilities. But what can be done if investors do not want
\nto invest here because they don't dare to take a risk,\" I Ketut
\nArsha Putra, the president of PT Kawasan Industri Gresik (KIG),
\nsaid.<\/p>\n
Soeharto, the corporate public relations manager of Maspion
\nGroup, which owns and runs the Maspion Industrial Estate in
\nGresik, expressed similar skepticism.<\/p>\n
He said foreign investors to date were more concerned about
\nthe political situation and did not only take business
\ncalculations into consideration. \"They do not see either
\npolitical stability or legal certainty. That's why they take a
\nwait-and-see attitude. Who would guarantee their businesses?\" he
\nsaid.<\/p>\n
At the beginning of the monetary crisis, Soeharto said
\neconomic consideration was very important. The economic situation
\nis not yet conducive. \"Actually, today, there has been an
\nindication that the economy has gradually gotten back on the
\nrecovery track. Unfortunately, political instability and legal
\nuncertainty have haunted the investors,\" he added.<\/p>\n
KIG has had an interesting experience. Before the economic
\ncrisis hit the country, the company, jointly founded by PT Semen
\nGresik Tbk and PT Petrokimia Gresik, was still able to attract
\nbetween five to ten buyers (industries). \"Until September this
\nyear, we were only able to attract two buyers, each with only
\nabout 1 hectare of land. Before the crisis, we could sell 2
\nhectares to each investor,\" Ketut Arsha said.<\/p>\n
For survival, KIG adopted a new strategy by leasing plots of
\nland, buildings and warehouses in the industrial complex on a
\nthree-year basis. This strategy has proved to be effective
\nbecause many investors showed interest in leasing the facilities.
\nOf a total of 135 hectares, 91 were rented out. The company plans
\nto lease another 16 hectares and sell the remaining 75. Of the 75
\nhectares, 40.7 hectares have been sold, while of the 16 hectares,
\n5.2 hectares have also been rented.<\/p>\n
Maspion Group has a different development for its Maspion
\nIndustrial Estate. Currently 12 industries have been operating in
\nthe 300-hectare complex in Gresik. Of the 12 companies, seven are
\nthe subsidiary firms of Maspion Group with products or activities
\nsuch as mattresses, automotive, construction, pipe and jetty,
\nwhile the remaining five are foreign firms (USA and Thailand).
\n\"We are lucky we have a number of subsidiary companies to take
\nadvantage of the situation,\" said Soeharto.<\/p>\n
Therefore, Maspion, at the moment, has no intention to lease
\nthe facilities and infrastructure. Its subsidiary companies alone
\ncould occupy 30 percent of the total capacity being marketed. \"We
\nhave certainly tried hard to market them. And for the moment,
\nmost of the companies operating in our complex have links with
\nthe Maspion Group.\"<\/p>\n
There are several other companies managing industrial estates
\nin East Java and actively luring investors. PT SIER (Surabaya
\nIndustrial estate Rungkut) is the first company to operate
\nindustrial estates in East Java. It has industrial zones in
\nRungkut, Berbek and Rembang (Pasuruan). The one in Rembang is
\nbeing operated under the flag of PIER (Pasuruan Industrial Estate
\nRembang).<\/p>\n
NIP (Ngoro Industri Persada) is a 200-hectare industrial
\nestate located in Ngoro, Mojokerto. NIP owns and manages two
\nproperty company groups -- PT Dharmala and RSEA.<\/p>\n
PT Suri Mulia Permai operates its industrial zone in
\nMargomulyo, Tandes, West Surabaya.<\/p>\n
Investors' reluctance to operate in industrial estates has
\nalso been caused by the government's inconsistency in its
\npolicies. Previously, companies were obliged to operate in
\nindustrial estates. Even though the regulation was not
\neffectively implemented, it could still function as a push
\nfactor. But the Habibie administration revoked the policy with
\nthe reason that it wanted to attract foreign investors. \"Whereas,
\nby operating in industrial estates, the environmental management
\nof the industries is top priority,\" said Ketut Arsha.<\/p>\n
The inconsistency caused many companies to open business in
\nareas with fertile soil.<\/p>\n
The government had also planned to develop Bangkalan area as
\nan industrial zone, but the project was left untouched following
\nthe postponement of the Suramadu bridge project. The Suramadu
\nbridge was designed to connect Surabaya and Madura island.<\/p>\n
Conflicts arising from the government's policies in agrarian
\nand labor affairs are other obstacles. Conflicts stemming from
\nagrarian and labor disputes are rampant in East Java. \"I learned
\nfrom my negotiation experience that Japanese investors were very
\nmuch afraid of workers' strikes and land disputes with the local
\npeople,\" he said.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/political-uncertainty-leads-investors-to-shun-industrial-estates-1447893297",
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