PT Megalopolis resumes industrial site expansion

JAKARTA (JP): PT Megalopolis Manunggal Industrial Development, developer of the MM 2100 Industrial Town in Cibitung, West Java, said on Tuesday it would continue its expansion in anticipation of a possible surge in future demand.

Company commissioner and advisor Goro Tamatsukuri said the expansion -- covering 445 hectares of new industrial area -- would be part of the company's third phase expansion program.

"We are optimistic that foreign investors, especially from Japan, will enter Indonesia later this year after seeing that the general election proceeded peacefully," he said in a news conference.

Concerns reigned that the elections could spark fresh riots in the country, plagued by ethnic and religious conflicts in the past several months.

Despite Monday's balloting proceeding smoothly, there also are fears that losing parties could cause trouble. Analysts believe the anxiety is exaggerated.

Tamatsukuri said there were about 10 foreign investors, most of them Japanese, who planned to develop their businesses on his industrial estate later this year.

"One of them is a giant electronic semiconductor company which will occupy 40 hectares of our area," he said.

Tamatsukuri said that his company -- a joint venture of Japan's Marubeni Corporation and PT Bekasi Fajar Industrial Estate, a subsidiary of the widely diversified Argo Manunggal Group -- began the third phase of the industrial estate's expansion project last year, but it was progressing slowly due to the drop in demand.

"We have invested around US$400 million in the estate. Our investment will reach around $1 billion after the development of the whole industrial site which covers 2,500 hectares, including its commercial and housing area, is completed by the year 2007," he said.

The company also will develop a 40-hectare zone for high-tech industry this year, he said.

First and second phase construction of the industrial estate projects, which cover over 1,000 hectares, are fully occupied. There are 95 companies operating in the area, 82 of which are owned by foreign investors.

"Total investment of the companies operating in our industrial estate reached $2 billion, with export value of $1.9 billion annually. They employ more than 32,000 employees," he said.

Tamatsukuri said 110 investors bought space in his industrial estate, but some of them have yet begin their operations due to the economic crisis and lingering fears over the country's unstable politic and social condition.

The majority, or 79 firms, are Japanese.

"But none of them have canceled their plans and pulled out of here. They are just waiting for the country's political condition to improve," he said.

PT Megalopolis, established in 1990, is 60 percent owned by Marubeni Corporation with the remainder owned by Bekasi Fajar Industrial Estate.

Tamatsukuri said demand for the industrial estate dropped sharply in the last two years.

"We could sell our space to only one investor last year and one more until today. Before the crisis began we could sell our space to over 20 investors annually," he said.

Indonesia's unstable political and social condition in the last two years made the country less attractive to foreign investors than its neighbors such as Thailand, Malaysia and the Philippines despite their higher prices for industrial estates.

"Japanese investors prefer to develop their business in Malaysia and Thailand, despite the fact that prices of industrial areas in the two countries are higher than in Indonesia, due to their relatively stable political condition," he said.

"However, we believe that they will come back to Indonesia after the elections, due to the country dependable, consistent and business-friendly investment policies, a huge pool of workers willing to work at competitive wages, and growing domestic market of goods and services," he said. (gis)