Demand for industrial estates to drop 10 percent
JAKARTA (JP): Industrial park developer PT Suryacipta Swadaya, a subsidiary of publicly listed PT Surya Semesta Internusa, expects a 10 percent drop in demand due to the currency crisis.
The company's president Basroni Rizal said that amid the monetary crisis, some investors had delayed their plans to open factories in Indonesia.
"But a lot more are still continuing their plans," he said.
He said that his company, which is currently developing a 1,400-hectare industrial estate in Karawang, West Java, was optimistic of reaching a target of selling at least 70 hectares of its estate every year despite the estimated lower demand.
"The demand of industrial land in Indonesia reaches at least 1,000 hectares per year. We have set a target to grab at least 7 percent of it, or 70 hectares per year," he said.
He said that his company was still negotiating with 20 foreign companies to enter his industrial estate.
Suryacipta secured yesterday a US$30 million loan from the London-based Commonwealth Development Corporation (CDC).
The six-year loan will be used to finance the construction of the second phase of its industrial estate in Karawang, called Kota Industri Suryacipta (Suryacipta Industrial City).
Charles S Jonan, the company's director, said the construction of the first phase of the estate was 99 percent complete and it was scheduled to be completed by the end of the year.
Charles said that about 80 percent of the first 500-hectare estate, which has opened since 1995, had been sold.
"We sold around 35 hectares in 1995 and 99 hectares in 1996. This year, we have sold 75 hectares as of September," he said.
He said foreign investors were still confident in operating in Indonesia despite the current monetary crisis, which had slashed the value of the Indonesian rupiah against the U.S. dollar by about 35 percent since it first hit the country in early July.
Charles said that the crisis, which had prompted the government to introduce a credit crunch policy and massive cutbacks in the state budget and state-related projects, would only be temporary.
"Most of the investment is long-term, which was planned a long time ago. So the investors choose to go ahead with their plans," he said.
The CDC, established by the British government in 1948 to finance long-term projects, has operated in Indonesia since 1971 and has so far provided about $300 million in loans to Indonesian companies.
CDC's country manager in Indonesia Mark Edwards said that the industrial estate in Indonesia was very promising and has grown rapidly with the government's full support.
"Our involvement confirms our confidence in the project and in the long-term investment environment notwithstanding the present economic problems," he said.
Suryacipta Industrial City is an integrated industrial estate, which comprises industrial park development, ready-to-use plants, a commercial complex, clean water and wastewater processing centers, telecommunications and electricity facilities, dormitories and low-cost housing.
Sixteen foreign and local companies have established their factories on the estate. These include ceramic maker PT Keramika Indonesia Asosiasi, battery maker PT GS Battery Inc and tire producer PT Bridgestone Tire Indonesia. (08)