Hannover Messe 2023 Conference : The Main Country for Manufacturing Sector Investment is Now Indonesia

From 2018 to 2022, Indonesia has an additional 1.6 times growth in investment realization. The rise is 2.1 times larger specifically for the manufacturing sector. This makes Indonesia now ranks among the top 20 countries in the world for foreign investment.

 

The Chairman of the Association for Industrial Estates (HKI), Sanny Iskandar, asserted that Indonesia had prepared the appropriate Industrial Estates (KI) in line with investor needs in its capacity as a provider of investment locations and in support of the Government's policy mandating that industries must be located in KI.  There is more than 100 KI spread on the island of Java and outside of Java, with KI on the island of Java set aside for high-tech and digital-based industries, labor-intensive industries, and downstream industries.

 

"In the meanwhile, KI outside Java is more suited for sectors that want to raise the added value of products derived from natural resources as well as sectors that spur new economic growth. Throughout Indonesia, the growth of industrial investment in KI is supported by high-quality infrastructure and facilities, such as power plants, industrial gas supply, information and communication technology networks, waste processing, toll roads, and freight train lines, as well as airports and ports," According to Sanny, in a conference on the themed "Investing in Manufacturing Sector" at the Indonesian Pavilion, Hannover Messe 2023, Wednesday (19/4).

 

He added, to support the implementation of the fourth industrial revolution, a smart-eco industrial park with a high-tech digital infrastructure  that is environmentally friendly has been established in Indonesia. According to him, Indonesia is ready for a circular economy system, digital hub, etc.

 

The following source, Cluster President of Indonesia and Timor-Leste for Schneider Electric Indonesia, Roberto Rossi, stated that Schneider's mission is to become a digital partner for industry players for sustainability and efficiency. As a leader in the global electrical device business, Schneider constantly supports and empowers human resources to maximize energy utilization and to bridge the gap between development and sustainability  for the future.

 

Furthermore, Schneider employs 3,800 people at its two major factories in Indonesia, which are located in Batam and Cikarang. His company is also involved in corporate social responsibility initiatives and programs that have a sustainable impact, such as teacher missions that involve working in vocational schools to identify the skills that the industry needs, community service programs around company locations, and tree planting programs to promote environmental sustainability.

 

Also, present as a speaker, Chief Executive Officer of PT Vale Indonesia Tbk, Febriany Eddy, stated that one of the key factors in favor of Indonesia as the ideal location for investments is the abundance of resources in the country. For instance, Indonesia is a country with the largest nickel resources in the world. Facts concerning the tendency toward energy transition have encouraged the industry to innovate in the use of mineral resources as raw materials. A total of 6.8 million dollars have been invested in Vale Indonesia, which supplies 3% of the world's nickel needs, employs 3000 people, and 99% of which are local Indonesian workers.

 

“Indonesia is a country with the 4th largest population in the world. This circumstance is one of Indonesia’s benefits because it can provide enough labor for multinational corporations. This is also supported by the fact that Indonesia also has a demographic bonus with an average worker age of 30 years. Compared to other countries which have an older workforce and it's quite difficult to get workers," said Deputy for Investment Promotion at the Ministry of Investment, Nurul Ichwan in the conference session.

 

Indonesia is the largest nation in ASEAN, according to Ichwan, both in terms of population and economy. Providing 36% of the GDP of ASEAN, Indonesia serves as an industrial hub for the global market. Ichwan added, Indonesia is a G20 member with strong economic resilience and growth, with a GDP reaching USD 1.3 trillion and a GDP per capita exceeding USD 5,000.

 

Moreover, based on Bloomberg data (April 2023) with a mere 2% chance of a recession in the future, Indonesia is a country that will withstand it. This is due to Indonesia's abundance of natural resources, including for the development of the electric vehicle (EV) industry.

 

At least 15% of the nickel used in the production of EV batteries will come from Indonesia in 2025. The Indonesian government offers several very appealing investment incentives to encourage the growth of industrial investment, including tax holidays, tax allowances, import duty exemptions, and super tax deductions. "Given these facts, Indonesia is the right country to become an investment destination for the global  manufacturing sector," said Ichwan.