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