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Singapore’s Sembcorp Development is building an industrial park at Kendal regency in Central Java, Indonesia to take advantage of the area’s affordable land cost, relatively low wages and less congested infrastructure, according to media reports.
Dubbed as Kendal Industrial Park (KIP), the 2,700ha development is a joint venture between Sembcorp and Indonesian industrial estate developer Jababeka. The partnership was sealed in 2012.
Spanning 860 hectares, KIP’s first phase will comprise factories, residential buildings and commercial complexes, and is expected to be completed by 2020. It is noted that the construction of factories and infrastructure such as roads has started this year. The development will also come with its own power plant and three water sources once it is fully completed.
According to Sembcorp’s CEO Kelvin Teo, manufacturers are interested in setting up a presence in Central Java, especially in KIP, due to its affordable land cost which is a third cheaper than Jakarta and its surrounding areas.
“We have people lining up… the Chinese, Japanese, Singaporeans and Taiwanese have expressed interest,” he said.
In addition, Central Java’s ports and roads in is not as severely congested as those in Jakarta and the surrounding West Java industrial zones, even though both have better accessibility.
Another plus factor is the low monthly minimum wage in Central Java of between 910,000 rupiah to 1.4 million rupiah, while that in West Java and Jakarta stands at 1.9 million rupiah and 2.4 million rupiah, respectively.
KIP is Sembcorp’s 12th industrial zone, after others in China, Vietnam and Indonesia’s Batam and Bintan islands.
Nikki De Guzman, Editor at CommercialGuru, wrote this story. To contact her about this or other stories email nikki@propertyguru.com.sg.
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