Only 30% of proposed industrial estates developed
Only 30% of proposed industrial estates developed
JAKARTA (JP): Only 30 percent of those companies licensed to develop industrial estates in Indonesia have done so, to date, as a result of inconsistencies in government policies and low demand.
According to the Association of Industrial Estates, as of the end of last year, the government had issued licenses for the development of 152 industrial estates on a total of 42,447 hectares of land across the country. However, only 50 industrial estates, covering a total of 17,140 hectares of land, have been constructed and operated.
Inconsistencies in government policies on the development of industrial estates can be traced back to the late 1980s, when the government first permitted private investors to participate in the development of such estates, which had previously been closed to the private sector.
Presidential Decree No. 53/1989 also eased some of the requirements on the opening of industrial estates, including reducing the minimum acreage requirement from 200 hectares of land to only 10 hectares.
Enthusiasm for locating enterprises in industrial estates increased after the government freed investors wishing to locate their operations in industrial estates from the requirement of conducting environmental impact studies.
West Java
The government's non-differential policy on industrial estates has resulted in the concentration of estates in Java, especially West Java, which are already furnished with adequate infrastructure.
Chairman of the Association of Industrial Estates Halim Sahab said that, of the 152 existing and proposed industrial estates, 75 are located in West Java with a total acreage of 21,489 hectares.
Because many plots of productive land have been converted into industrial estates, especially those in West Java, President Soeharto last February closed the possibility of establishing new industrial estates in West Java, especially in the Tangerang district.
Agreeing with Soeharto's move, Halim told journalists after speaking at a seminar on infrastructure development here last week that it was time for the government to introduce new incentives for those who wanted to open industrial estates outside Java.
He said his association had proposed to the government to establish a national authority for industrial estates which would make suggestions to the government regarding the development of industrial estates and would ensure that industrial estates were developed in accordance with land use master plans.
Hartojo Wignjowinoto, a property observer at PT Asian Pacific Economic Consultancy Indonesia (Aspecindo) Kreasi, said the government seemed to be too hasty in issuing regulations on industrial estates.
"The government seemed to be hasty in issuing the industrial estate ruling in 1989, which invited private investors to enter the industrial estate sector, because it never did any market survey on the matter," Hartojo was quoted by Bisnis Indonesia daily as saying.
As a result, Hartojo said, many private investors submitted proposals for building industrial estates. However, many of those who already had the government's permission could not realize their plans. Some of them could not even appropriate the targeted land and build the needed infrastructure.
Rescheduling
As because so many holders of licenses for industrial estates have not built them, many companies wanting to expand their businesses in the proposed industrial estates have been forced to reschedule their expansion plans.
To help such companies, the Ministry of Industry issued a circular letter last month, No. 726/6/1995, which gave some leeway for companies which had already appropriated 20 percent of their proposed plots outside of industrial estates before February this year to go ahead with their plans.
As for companies which got licenses for expansion or new projects after February, they are advised by the circular to build their facilities within the existing industrial estates.
The government has also repeatedly called on the current holders of industrial estate licenses, especially those who have already appropriated lands, to soon build their proposed estates.
If many proposed industrial estates are still left undeveloped in near future, Hartojo predicted that more powerful industrial estate owners would be tempted to acquire the smaller ones, especially in Java. (rid)