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*Seven companies to relocate facilities to Indonesia, invest $850m*



*Seven companies to relocate facilities to Indonesia, invest $850m*

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   Mardika Parama

   The Jakarta Post

Jakarta   /   Tue, June 30, 2020   /   05:22 pm

President Joko “Jokowi” Widodo announced on Tuesday that seven foreign
companies had confirmed plans to relocate production facilities to
Indonesia, mostly from China, an encouraging signal for the country’s
investment climate amid the pandemic.

The relocation of factories of the seven companies, which include South
Korean industrial conglomerate LG and Japanese electronics giant Panasonic,
is estimated to bring investment of US$850 million to the country and
potential employment for 30,000 workers, according to the Investment
Coordinating Board (BKPM).

“I’ve ordered the ministers and the BKPM head to provide the best services
for the industries relocating from China to Indonesia,” Jokowi said on
Tuesday during a visit to the Batang Industrial Park in Central Java. “If
there is any difficulty with permit processing, I’ve ordered the BKPM head
to take care of it, from A to Z, so investors can feel catered to.”



The President also highlighted the issue of land procurement in the country
and committed himself to backing up the investors until such problems were
resolved. For investors who had not yet procured land for their facilities,
he offered the newly established Batang Industrial Park as a location.

“We will provide around 4,000 hectares of land here, and in the first
phase, there will be 450 hectares,” he said.

The coronavirus outbreak, which was first detected in China, has strained
Indonesia’s foreign direct investment, as projects have been delayed as a
result of social restrictions to contain the spread of the virus. Indonesia
has booked a 9.2 percent year-on-year (yoy) decline in foreign direct
investment (FDI) to Rp 98 trillion ($6.8 billion) in the first quarter of
2020.

The pandemic has also disrupted global supply chains and has made some
companies question their heavy reliance on China, while the country’s trade
war with the US burdened the industries with additional tariffs.

To take advantage of the situation, the government has established a
special task force to attract businesses leaving China and facilitate their
relocation to Indonesia.

Jokowi stated that 17 more companies were looking to open facilities in
Indonesia. BKPM data show that the potential relocation and facilities
expansion of the 17 companies will bring in total investment of $37 billion
and provide employment for 112,000 people.

He said the country had failed to lure companies in the past, such as when
33 companies moved away from China last year but none went to Indonesia.

According to government data, the Panasonic relocated its facilities to
Indonesia to turn Southeast Asia’s biggest economy into its export base for
home appliances. Meanwhile, LG Electronics moved its facilities from South
Korea as it planned to turn Indonesia into its regional hub to expand its
market in Asia and Australia.

Other companies that have reportedly confirmed their relocation include
Taiwan-based audio equipment maker Meiloon, Japanese rubber products
manufacturer Sagami, US-based light product maker Alpan, Taiwan-based
tire-maker Kenda and Japanese automotive component manufacturer Denso.

Alpan reportedly plans to relocate their facilities from Xiamen, China, to
Kendal, Central Java, due to the 25 percent import tariff slapped on
products from China.

State-Owned Enterprise Minister Erick Thohir said he would ensure a smooth
licensing and relocation process for investors to set up factories in the
industrial park.

“The Batang Industrial Park has a prime location and is owned by [state
plantation firm] Perkebunan Negara IX, so there will be no problem in the
relocation process and licensing in the future,” he said.

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