Moving forward: Jokowi (right) with Hyundai Motor Group executive chairman Chung Eui-sun at the PT Hyundai LG Indonesia plant in West Java. LG’s battery precursor smelter is in North Maluku, the cathodes in Batang and the battery production in Karawang. — AFP
JAKARTA: Coordinating Maritime Affairs and Investment Minister Luhut Pandjaitan says the government has decided to designate the Batang Integrated Industrial Zone (KITB) as a special economic zone (SEZ).
That status means the KITB is set to benefit from certain incentives reserved for SEZs.
“Thus, we will provide the same incentives, tax holidays and various other benefits as those given to other SEZs,” he said last Friday at the inauguration ceremony for the new industrial area, as reported by Kumparan.
The industrial zone in Central Java is expected to create at least 250,000 jobs in the area and attract trillions of rupiah in investment.
President Joko “Jokowi” Widodo, who headlined the opening event, praised the KITB as an opportunity to attract overseas investors to build factories in Indonesia, and noted that the country’s rank in a global competitiveness index had improved to 27th position.
The Institute for Management Development’s (IMD) World Competitiveness Ranking (WCR) 2024 published last month ranked Indonesia 27th out of 67 countries assessed, marking an improvement from the 34th place the archipelago achieved in 2023.
In South-East Asia, only Singapore and Thailand ranked higher than Indonesia.
The President said several factors had contributed to the improved ranking, including the country’s economic and political stability and a relatively low level of inflation.
“This is our strength, and I’m pleased that, with my decision to have an industrial zone located in Batang with an area of 400ha, which is fully occupied, we have now opened another 400ha on the northern side of the toll road.
“The total planned area is 4,300ha, which will eventually accommodate more industries,” Jokowi said.
However, the President cautioned that, unless the opportunities were seized wisely, the area would not benefit the country.
“I see that there is a lot of interest for industries to relocate their factories to countries that have stable economic growth, low inflation and a high degree of political stability, and that’s how a lot of investors view Indonesia.
“However, if we fail to make the right decisions, those opportunities will surely disappear,” the President warned.
Investment Minister Bahlil Lahadalia, who was also present at the opening ceremony, said that various firms had already invested in the industrial zone, with 18 businesses having invested more than 14 trillion rupiah to create some 19,000 jobs.
The government was negotiating a deal worth US$600 to US$800mil with South Korea’s LG Energy Solution to build an electric vehicle battery cathode plant in Batang, The Jakarta Post reported last December.
Bahlil said that that plan was nearing fruition.
“LG Group will begin building cathodes as part of the vehicle battery ecosystem in September, after completing a feasibility assessment in August, and the cathodes will be developed here in Batang,” the investment minister said.
“So, for LG battery cells, the precursor smelter is located in North Maluku, the cathodes in Batang and the battery production in Karawang. — The Jakarta Post/ANN
