Taiwanese company to invest $170 million in Kendal Industrial Park

September 26, 2019

Suherdjoko and Rizki Fachriansyah www.thejakartapost.com - 26/09/2019,  04:29 PM

As Indonesia steps up efforts to attract foreign direct investment (FDI) following concerns over the economic slowdown, a Taiwanese company has announced a plan to invest US$170 million in Kendal Industrial Park, Central Java.

“We have many vocational schools here operating on a curriculum that can be tailor-made to fit the needs of the industry. It’s part of our idealized link-and-match strategy between the education and industrial sectors,” he added.

“Investors have flocked to Central Java because we offer a safe and stable investment climate. In addition to incentives and ease of doing business, we boast a highly skilled workforce,” he said.

Ganjar said Taiwan was among the top 10 countries to have invested in the region.

Central Java was the third most preferred FDI destination among the country’s 34 provinces during April-June this year. It welcomed 508 FDI projects worth $732.9 million during the period, trailing behind West Java and Jakarta, according to Investment Coordinating Agency (BKPM) data.

The President Joko “Jokowi’ Widodo administration has increased efforts to attract more FDI to improve the country’s slowing economic growth. Indonesia’s gross domestic product (GDP), the largest in Southeast Asia, grew only 5.05 percent in the second quarter, its slowest pace in two years. Investment, which accounts for about 30 percent of GDP, expanded only 5.01 percent in the same period.

“Many businesses from Taiwan have made investments in Central Java over the years. The number of potential investors has increased lately. That’s why we came [to the province] – to follow up on the latest investment plans. We hope our partnership [with the administration] would strengthen bilateral [relations between Taiwan and Indonesia],” Huang said.

Taiwan External Trade Development Council (Taitra) president James CF Huang revealed the investment plan during a meeting with Central Java Governor Ganjar Pranowo in Puri Gedeh, Semarang, on Wednesday. Huang said the various incentives offered by the province had prompted the company, the name of which was kept confidential throughout the meeting, to invest in Kendal Industrial Park.

Ganjar went on to say that Central Java would benefit from further investment as it would create new jobs, thereby accelerating local economic growth.

The government took such measures following a somewhat pessimistic World Bank assessment of Indonesia’s economic condition, which it considered susceptible to capital outflows and relatively cut off from global supply chains.

“I know that in the past five years we’ve improved our ease of doing business [ranking] and have also started simplifying [business] licensing through the OSS [Online Single Submission], but that is not enough,” said Jokowi earlier this month.

Jokowi previously gave his ministers a month to identify and revise ministerial regulations deemed harmful to the country’s chances of attracting FDI amid fierce competition from neighboring nations. Furthermore, he has also instructed Cabinet members to resolve problems faced by multinational companies that have pledged to do business in the country but have yet to realize their investments.

Taiwan’s latest investment comes on the heels of Indonesia’s renewed quest to streamline and, in the most severe cases, eliminate overly complicated regulations and permits thought to have deterred international companies from investing in the country.

“If they decide to follow through with the $170 million investment, it will certainly make for a good business opportunity. Taiwanese businesses that have invested [in Central Java] are mostly textile, electronics and clothing companies,” she said.

The Capital Investment and One-Stop Integrated Services Agency's (DPMPTSP) head in Central Java, Ratna Kawuri, said Taiwan had made a total investment of $47.25 million in the province since 2015.

Indonesia currently ranks 73 on the World Bank’s Ease of Doing Business Index, while neighboring Vietnam, Thailand and Malaysia rank 69, 27 and 15, respectively. Meanwhile, Singapore ranks second only to New Zealand, which tops the index.