Indonesia and Vietnam Compete for Factory Relocations, Minister Warns
The Minister of Industry, Agus Gumiwang Kartasasmita, has spoken openly about the ongoing trend of global companies restructuring their businesses by relocating factories. This shift is being driven by fragmented international trade, supply chain disruptions, and geopolitical dynamics.
While these conditions present risks for some nations, Agus stated that the current situation offers a significant opportunity for Indonesia to establish itself as a global manufacturing hub. However, he warned that this opportunity will not last indefinitely or arrive automatically. He noted that global companies currently moving their production bases are not looking at Indonesia in isolation; they are also considering Vietnam, Thailand, Malaysia, and India as potential relocation destinations.
“The companies currently moving their production from one country to another are not simply waiting for Indonesia. As I mentioned, they are comparing us with Vietnam, Thailand, Malaysia, India, and Mexico,” said Agus Gemmawang during the Business Forum and the 25th National Working Meeting of the HKI in Jakarta on Thursday.
Consequently, Agus emphasised that the momentum of these global factory relocations must be utilised as quickly as possible. If Indonesia fails to enhance its competitiveness and provide investment certainty, these opportunities could be seized by competing nations.
“As I stated, this window will close; it will not remain open forever. It will close even faster for countries that are unprepared,” Agus added.
In the context of industrial estates, Agus Gumiwang noted that what is being offered today is no longer just about land, but about time. Specifically, it concerns how quickly an investment commitment can be realised into actual production activities.
“What they are buying is no longer the number of square metres of land; they are buying time. Time means how quickly an investment commitment can easily transition into production,” explained Agus. “And time means how little uncertainty they must endure throughout that process. That is where the true added value lies for us and for our industrial estates,” he concluded.