Industrial estates await supportive regulation
Industrial estates await supportive regulation
The Jakarta Post
Jakarta
Having faced a business climate that has not been conducive since
the 1997 monetary crisis, industrial estate developers are
anxiously awaiting the government's new regulation in support of
their development.
Chairman of the Industrial Estate Association (HKI) Johannes
Archiadi told The Jakarta Post recently that a new regulation was
necessary to support the development of more than 25,000 hectares
of land already allocated for industrial estates.
According to HKI's report, there are 81 industrial estates
located in 12 provinces across the country.
"We are expecting a government regulation related to the
management and the development of the estates," he said recently.
Johannes said such a regulation would be needed because the
present Presidential Decree No. 41/1996 on Industrial Estates
could no longer serve as a legal basis after the implementation
of regional autonomy in 2001.
"Regional autonomy has brought different perceptions among
local administrations in managing industrial estates, which have
often caused more burdens for developers," he said.
Many regional administrations, he added, have failed to
improve their infrastructure due to a lack of funds.
"Most roads leading to industrial estates are in a bad
condition, which can discourage investors from establishing
factories there," Johannes said.
One of the companies complaining of poor infrastructure was LG
Electronics Indonesia (LGEIN), which had complained about the
badly damaged 11-kilometer road leading to its factory in
Tangerang Banten.
The firm officials expressed concern that such a condition
would discourage its South Korean principal to expand its
business in the country.
Johannes concluded that poor infrastructure and legal
uncertainty have been barriers for the industrial estates in
offering land to new companies.
"Up to now, we have not been able to return to a condition
where investment in industrial estates is lucrative. We are
hoping that the present government notices the condition and
realizes that developing the estates is vital to support economic
growth," he said, adding that every 1 percent growth in
industrial estates reflects a 1 percent growth in the economy.
At present, there are about 6,000 companies operating in
industrial estates with about 600,000 workers.
HKI executive director Fahmi Shahab said the figure was too
small considering that the association members occupied only
6,250 hectares, or only about 25 percent of the allocated land.
"The ideal percentage of the land usage should be 70 percent,
while the remaining 30 percent could be used for other purposes,
such as public facilities," he said.
He added that if this situation continued, foreign
manufacturing companies could move their factories to neighboring
countries that offer a better investment climate. (006)