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)