Indonesia Update W4 April 2025

Highlighted Topic: Indonesia’s Warehousing Boom: Unveiling Its Growth, Modernization, and Strategic Shifts

Indonesia’s warehousing industry continues to display remarkable momentum in 2024, anchored by rising e-commerce demand, urbanization, and advancements in supply chain networks. The sector has evolved into a key component of the country’s economy, reflecting its capacity to adapt to shifting consumer and business needs. Below is an analysis of the industry’s current state, segmentation, and modernization initiatives.

Market Segmentation and 2024 Trends

By Business Model

Industrial Freight:
- Market Share: Holding over 48% of the warehousing revenue, this segment maintains dominance due to high retail and FMCG demand.
- Insights: The segment thrives on omni-channel retail models, which integrate physical and online sales. Automation is being aggressively adopted to increase efficiency, catering to tight delivery schedules.
Cold Storage:
- Market Share: Accounts for 20% of the market with a 12% year-on-year growth.
- Drivers: Growing demand for temperature-controlled logistics for food, beverage, and pharmacy products. Vaccine storage and biologics lead the pharmaceutical cold chain, while frozen food segments support urban F&B expansion.
Custom Warehousing and ICDs/CFS:
- Market Share: Contributing 16%, this category highlights tailored logistics for diverse needs.
- ICDs (Inland Container Depots): Inland facilities that connect interior regions with seaports, reducing port congestion and connecting remote areas to global routes.
- CFS (Container Freight Stations): Near-port hubs that manage cargo consolidation (LCL) and customs processing, streamlining the first and last-mile distribution of goods.
Others (Bonded Warehousing, Technology-Enabled Facilities):
- Innovative facilities, including bonded warehouses supporting duty postponement, form a smaller but critical sector, particularly for international firms navigating customs efficiently.
- Automated systems and robotic warehouses are gaining traction, enhancing inventory accuracy and operational speed.

By End Users

Food & Beverage (F&B):
- Market Share: Dominating the market at 35%, this segment reflects the growing demand for fresh and processed food.
- Insights: Urban centers drive consumption, especially for cold storage facilities. Over 50% of F&B goods now use temperature-controlled warehousing, ensuring freshness in frozen and perishable categories.
Retail (Including E-Commerce):
- Market Share: Expanded to 28% of utilization in 2024, reflecting the continuous surge in online shopping.
- E-Commerce Impact: Fast operations by platforms like Shopee and Tokopedia demand same/next-day delivery services, encouraging investment in high-capacity, automated facilities near urban hubs.
Pharmaceuticals and Healthcare:
- Market Share: Holds 10% with a 15% growth rate.
- Key Areas: Vaccines and biologics form the backbone of this sector, facilitating exports and meeting local health initiatives. Cold chains are being optimized in Jakarta and other major urban clusters.
Automotive and Engineering:
- Market Share: Accounts for 8%, fueled by the growing automobile ecosystem and emerging electric vehicle logistics.
- Regional Advantages: Electrification of vehicles has expanded logistics centers in markets like West Java.
Others (Including Technology & Fashion):
- The fast-growing FMCG and fashion sectors highlight increased adoption of advanced warehousing technologies for inventory control and fulfillment optimization.

Bonded Logistics Centers (PLB): Revolutionizing Indonesia’s Supply Chain

Purpose and Intent

Bonded Logistics Centers (PLBs) were introduced in 2015 as part of Indonesia’s effort to complete domestic supply chain. These facilities allow goods to be stored without immediate customs clearance, thereby reducing import-export bottlenecks.

Key goals of the initiative included:

Lowering overall logistics costs by up to 20%.
Reducing reliance on Singapore as a regional transshipment hub by allowing imports to transit directly into Indonesia.
Attracting foreign direct investments by creating streamlined trade conditions.

Performance and Evolution

Efficiency Gains: By 2020, PLBs covered over 119 facilities under the Kawasan Berikat Mandiri (Self-Administered Bonded Zone) program, allowing qualified operators to self-govern. This innovation reduces customs inspections and promotes digital tracking systems.
Occupancy Rates & Interest: PLBs boast occupancy rates exceeding 85%, supported by growing interest from companies like LOGOS and MMP.

Impact on the Industry

Reducing Singapore Dependence: By facilitating direct routes from overseas manufacturers into Java-based distribution hubs, PLBs have reduced Indonesia’s dependency on Singapore’s warehousing and transshipment.
Fostering Innovations: Enhanced infrastructure creates opportunities for seamless trade, making sectors like F&B and pharmaceuticals increasingly competitive in Southeast Asian markets.

Recent Developments in Warehousing Projects

LOGOS Green Logistics Hub: A joint venture with Astra and IFC, this project is designed specifically for the e-commerce and FMCG sectors, with a sustainability-focused agenda.
PT Mega Manunggal Property (MMP): Expansion continues with its 5,616 sqm Pondok Ungu Extension, currently occupied by Yamaha Motor Indonesia and Havi.
DHL Supply Chain: Launched a facility in Bekasi to support e-commerce fulfillment and cold storage for F&B and pharmaceuticals.
Kulonprogo Warehouse Development: This 2022 initiative by the Yogyakarta regional government, valued at IDR 274.06 billion (approximately USD 17.7 million), underscores regional growth aimed at decentralizing Java-centric logistics.

Outlook and Skylight’s Perspective

With an expected market valuation of USD 4.25 billion by 2028, Indonesia’s warehousing industry exemplifies strong investment potential. However, inefficiencies in logistics chains, particularly in legacy facilities, need to be addressed to ensure sustained growth.

Observations:

Investment in Cold Chains: The F&B and healthcare sectors remain pivotal in driving warehousing innovation. Expanding frozen and temperature-controlled storage capabilities will fortify Indonesia’s standing in global supply chains.
Technology as a Catalyst: Automated warehousing solutions provide scalability to meet the growing needs of urban markets and e-commerce operations.
Regional Diversification: While Surabaya, Medan and its outer areas remain key nodes, second- and third-tier cities such as Makassar, Balikpapan, Jayapura and Palembang offers a pathway to decentralize economic activity and alleviate dependency on Greater Jakarta. These emerging hubs provide opportunities to improve connectivity and strengthen Indonesia’s logistics network across its vast archipelago.

Latest Update

PT Semen Gresik Collaborates With Kendal Government To Build RDF
- PT Semen Gresik and the Kendal Regency Government officially established a strategic partnership through an MoU on April 17, 2025 to address urban waste management through Refuse Derived Fuel (RDF) technology. The RDF will be constructed in the Darupono landfill, South Kaliwungu .
- Based on data from the Kendal District Environment Office, waste generation in 2024 reached 436 tons per day. Meanwhile, waste entering the Darupono landfill in the same year reached 191.285 tons per day.
- Darupono Landfill, the only landfill in Kendal Regency, is predicted to experience overloading by 2026. Currently, only 0.74% of waste in Kendal is managed, while the rest is left with an open dumping system.
- In this cooperation, the Kendal District Government acts as a producer of RDF, while PT Semen Gresik is the buyer of RDF products. As such, the RDF plant will be developed by the Kendal local government.

Chemical Company from China Enters JIIPE Gresik
- Golden Elephant Sincerity Chemical (GESC), a Chinese chemical company, has launched its first international expansion by investing $600 million (4.2 billion yuan) in the JIIPE in East Java, Indonesia. Covering over 20 hectares, the facility will act as a regional business hub for Asia, catering to both domestic and export markets. The investment will be developed in two phases. Phase one, valued at 1.24 billion yuan, will build facilities with an annual production capacity of 120,000 tons of melamine, 150,000 tons of nitric acid, and 200,000 tons of ammonium nitrate. Phase two, costing 3.06 billion yuan, will capitalize on Indonesia’s natural gas resources to erect large-scale synthetic ammonia and urea plants, establishing an integrated supply chain from natural gas to chemical products.
- Chairman Lei Lin acknowledged the significance of the location, explaining that JIIPE’s integrated industrial infrastructure, strategic deep-sea port, and readiness for sustainable practices were decisive factors. After almost opting for a Russian expansion years prior, GESC found JIIPE’s offerings ideal for their needs.

Saguling Solar Power Plant Obtained IDR 1 Trillion Funding
- The Indonesian government Solar Power Plant (PLTS) together with international partners who are members of the Just Energy Transition Partnership (JETP) officially signed an agreement to finalize a USD 60 million (IDR 1 trillion) financing of the PLTS Saguling Project in West Bandung Regency, West Java.
- The signing of this agreement was carried out by the main partners, namely PT Indo ACWA Tenaga Saguling as the developer, PLN Indonesia Power, DEG financing institutions from Germany, Proparco from France, Standard Chartered from the UK and the Coordinating Minister for Economic Affairs Airlangga Hartarto.
- The power plant has an installed capacity of 92 MWp and is expected to reduce carbon emissions in the electricity system in Indonesia by at least 63,100 tons per year, and is signalled to increase electricity production from solar power in Indonesia by around 13%.

Korean Dongsung Chemical Operating in West Java
- Dongsung Chemical has inaugurated its new polyurethane (PU) manufacturing facility in Karawang, West Java, on April 29, 2025. Spanning 81,000 square meters, the facility has an annual production capacity of 67,000 tons, making it three times larger than the company’s existing plants in Korea, Vietnam, and China. It will produce prepolymer, synthetic polyester, and polyurethane resin.
- Dongsung features a warehouse capable of storing up to 1,000 tons of raw materials, ensuring stable production amid supply chain challenges. The project, valued at KRW 200 billion (approximately USD 150 million), supports Dongsung Chemical’s growth strategy in markets like footwear, synthetic leather, automotive, electronics, and Indonesia’s furniture industry.

China Huayou To Replace Korea LG In Electric Vehicle Battery Project
- LG Energy Solution (LG) has officially cancelled its participation in Indonesia’s integrated nickel-based battery project, a venture initially aimed at establishing a comprehensive supply chain from mining to battery production. The project, known as the Titan Project, was estimated to involve a total investment of $9.8 billion, including $850 million for upstream mining, $4 billion for a high-pressure acid leach (HPAL) smelter, $1.8 billion for a precursor/cathode plant, and $3.2 billion for a battery cell production facility.
- The decision to withdraw came despite prior negotiations with Indonesia Battery Corporation (IBC) and earlier commitments from the LG consortium, which consisted of major South Korean players such as LG Energy Solution, LG Chem, LG International, and Posco, alongside China-based Huayou Holding. While the specific reasons for LG’s withdrawal were not disclosed, it is speculated that the U.S. Inflation Reduction Act (IRA), which created unfavorable conditions for battery production reliant on Chinese investments, may have influenced the decision. Past challenges were also linked to regulatory hurdles and shifting global policies, prolonged negotiations over five years
- Following LG’s pullout, the Indonesian government, through state-owned mining holding company MIND ID, is exploring new opportunities to keep the project viable. In the recent announcement, the Indonesian government has chosen China Huayou, to replace LG Energy Solution, mentioned Huayou’s extensive experience and prior investments in Indonesia, particularly in similar projects have equipped the company with a strong understanding of the local industry and technology.

19 Korean Companies Expressed Interest To Further Invest In Indonesia
- South Korean companies are deepening their investments in Indonesia, with plans to inject an additional US$1.7 billion. Key investors include:
- Lotte Chemicals: Preparing to launch Indonesia’s largest petrochemical plant by September or October 2025.
- POSCO Holdings and KCC Glass Corporation: Both are planning fresh investments to reinforce their presence in the region.
- Hyundai Motor Group: Continuing its engagement with long-term investments in Indonesia. Hyundai has approached Coordinating Minister of Economic Affairs to request incentives for utilizing domestically mined materials, including nickel, cobalt, and manganese, in its local manufacturing operations. The discussion highlighted Hyundai’s reliance on these resources for its production needs in Indonesia. Though the government acknowledged the request, Minister Airlangga emphasized that these raw materials are already part of Indonesia’s local content requirement calculations, without confirming any new incentives.
- No details provided for the other companies such as KB Financial Group, LOTTE Shopping, EcoPro, and SK Plasma.

55 Gas Fields In Indonesia To Be Auctioned for National Energy Security
- The Ministry of Energy and Mineral Resources (MEMR) is expediting the auction process for oil and gas Working Areas (WA) as part of its strategy to strengthen Indonesia’s energy security. A total of 55 WAs are being prepared for potential investors. This acceleration will span not only the auction stage but also exploration and production phases to meet national energy goals.
- Recently, MEMR announced the winners of the second phase of the oil and gas Working Areas auction, which opened in December 2024. Here are the details:
- Kojo Working Area (WA), Offshore Makassar Strait

- - Resources: 90.2 MMBO (million barrels of oil), 2.1 TCF (trillion cubic feet) of gas
  - Winner: Armada Etan Limited
  - Investment Commitment: USD 2.1 million (IDR 35.35 billion) under the Cost Recovery PSC contract system

- Binaiya WA, Offshore Maluku

- - Resources: 6.7 BBO (billion barrels of oil), 15 TCF of gas
  - Winner: Consortium of PT Pertamina Hulu Energi, PC North Madura II Ltd., and SK Earthon Co. Ltd.
  - Investment Commitment: USD 6.5 million (IDR 109.44 billion) under the Cost Recovery PSC contract system

- Serpang WA, Offshore East Java

- - Resources: 1.2 BBO, 6.3 TCF of gas
  - Winner: Consortium of PC North Madura II Ltd., INPEX Corporation, and SK Earthon Co. Ltd.
  - Investment Commitment: USD 4.7 million (IDR 79.13 billion) under the Cost Recovery PSC contract system

- WA Gaea, Onshore & Offshore West Papua

- - Resources: 9.6 BBO, 71.8 TCF of gas
  - Winner: Consortium of Enquest Petroleum Production Malaysia Ltd., PT Agra Energi Indonesia, BP Exploration Indonesia Ltd., MI Berau B.V., CNOOC Southeast Asia Ltd., ENEOS Xplora Inc., Indonesia Natural Gas Resources Muturi Inc., and KG Wiriagar Petroleum Ltd.
  - Investment Commitment: USD 4.95 million (IDR 83.34 billion) under the Cost Recovery PSC contract system

- Gaea II, Onshore & Offshore West Papua

- - Resources: 8.5 BBO, 35.1 TCF of gas
  - Winner: Same consortium as WA Gaea
  - Investment Commitment: USD 3.45 million (IDR 58.09 billion) under the Cost Recovery PSC contract system

Rising Trend of Warehouse Demand in Jabodetabek
- Warehouse demand in the Greater Jakarta region has seen significant growth, particularly since the Covid-19 pandemic reshaped logistics and supply chain dynamics. According to Astra Property Director Wibowo Muljono, tenants are becoming increasingly selective, prioritizing properties that align with sustainability and operational efficiency.
- A prominent trend is the focus on warehouses incorporating green energy concepts alongside convenient proximity to logistics infrastructure. This shift is driven largely by the Fast-Moving Consumer Goods (FMCG) sector, which seeks modern facilities equipped to meet high operational standards. Among these, Category A warehouses stand out as the preferred choice for their advanced features, including fire safety systems, dedicated loading and unloading areas, high ceilings, and cutting-edge logistics infrastructure that enhance functionality and sustainability.
- The demand for Grade A warehouses is further supported by data from JLL, which reports that the supply of modern logistics facilities in the Jabodetabek area surpassed 2.7 million square meters by mid-2024. To meet this surging demand, Astra Property has announced plans to expand its warehousing projects, affirming the region’s position as a critical logistics hub in Indonesia.

Indonesia’s Investment Realization In Q1 2025
- Minister of Investment and Downstream/Head of the Investment Coordinating Board (BKPM) Rosan Perkasa Roeslani reported on investment realization for the first quarter of 2025, touched IDR 465.2 trillion (USD 27.7 billion, assumption USD 1= IDR 16,800).
- The investment consisted of Direct Domestic Investment (DDI) amounting to IDR 234.8 trillion (USD 13.97 billion) or 50.5%. Meanwhile, Foreign Direct Investment (FDI) reached 49.5% or IDR 230.4 trillion (USD 13.73 billion).
- The realization increased on an annual basis by 15.9%, compared to the same period last year of IDR 401.5 trillion (USD 23.9 billion). Meanwhile, on a quarterly basis, it increased by 2.7% where the previous quarter’s realization is IDR 452.8 trillion.
- The top 5 FDI investments originates from Singapore (USD 4.6 billion); Hong Kong’s (USD 2.2 billion); China (USD 1.8 billion); Malaysia (USD 1 billion) and Japan (USD 1 billion).

Potential Textile Investor To Invest In Indonesia
- Significant investments, amounting to hundreds of millions of US dollars, are expected to flow into Indonesia’s upstream textile sector, according to Redma Gita Wirawasta, Chairman of the Indonesian Fiber and Filament Yarn Producers Association (APSyFI). This surge is attributed to the cascading effects of the import duty tariff policy introduced by US President Trump in April 2025.
- Three APSyFI members are set to reactivate production capacity this year, while one foreign direct investment (FDI) company plans to begin operations in 2026. These developments are projected to add 190,000 tons of polyester fiber, 250,000 tons of Partially Oriented Yarn (POY), and 50,000 tons of Drawn Textured Yarn (DTY) to national production. The total investment for this expansion is estimated at USD 250 million (IDR 4.2 trillion), excluding two other FDI companies exploring potential relocation opportunities within Indonesia.
- This momentum has been further reinforced by measures from the Ministry of Industry and the Ministry of Trade to strengthen the sector. Key initiatives include maintaining requirements for Import Approval and Technical Consideration for Environmental Impact Analysis, as well as plans to impose Anti-Dumping Import Duties on filament yarn (POY and DTY).

The Merger of Adira Finance And Mandala Finance
- On April 30, 2025, PT Adira Dinamika Multi Finance Tbk (ADMF) and PT Mandala Multifinance Tbk (MFIN) announced the planned merger of the two entities, with Adira Finance as the surviving party, with a total asset reaching IDR 38.4 trillion (USD 2.29 billion) This merger plan is also part of the consolidation of MUFG Financial conglomerate in Indonesia.
- This merger plan is a follow-up to the acquisition by MUFG Bank, Ltd. (MUFG Bank) and Adira Finance which was completed on March 13, 2024, where the purpose of this merger is to further strengthened Adira Finance’s position as a market leader in Indonesia’s multifinance industry.
- MUFG Bank and Adira Finance invested a total of IDR 7 trillion (USD 420 million) to acquire 80.6% stake in Mandala Finance, with MUFG Bank and Adira Finance holding 70.6% and 10% ownership respectively. As of March 31, 2025, MUFG Bank owns 89.26% of Mandala Finance, and Adira Finance owns 10% of Mandala Finance.

Vietnam VinFast Factory Progress in West Java
- VinFast, a Vietnamese electric vehicle (EV) manufacturer, has secured a long-term syndicated loan agreement worth IDR 1.85 trillion (USD 110 million) with PT Bank Negara Indonesia (BNI) and PT Bank Maybank Indonesia (Maybank) to fund the construction of its EV assembly plant in Subang, West Java. BNI, acting as the lead arranger and underwriter, will contribute IDR 1.51 trillion (USD 90 million), while Maybank will cover the remaining amount. An additional USD 80 million accordion facility has been made available to support future expansion of the project.
- The plant began construction in July 2024 and is expected to start operations in the second half of 2025. It is designed to cater to both domestic and export markets, bolstering Indonesia’s EV industry and creating jobs.
- VinFast is also launching several all-electric models in Indonesia, including right-hand-drive variants of the VF 3, VF 5, and VF e34. The company is actively expanding its dealership and service network nationwide, offering competitive sales packages to early EV adopters. As part of its broader commitment to Indonesia’s green energy ecosystem, VinFast is partnering with companies like all-electric taxi operator Green SM and charging infrastructure firm V-GREEN.

China Tongkun Chemical Project Progressing in Kalimantan
- China’s Tongkun Group Co., Ltd. has made significant progress on its integrated refining and chemical project in Indonesia, managed by its subsidiary PT Taikun Petrochemical. The project, located in the North Kalimantan Industrial Park and spanning 720 hectares (100 hectares for photovoltaic power generation), is designed to be fully integrated, encompassing refining, PTA, polyester, spinning, and weaving production chains.
- The total investment for the project was recently revised from $8.62 billion to $5.95 billion to reflect shifting global and domestic economic conditions. Under this updated plan, the refining capacity is set at 10 million tons annually, with 2 million tons of paraxylene (PX) and 1.2 million tons of ethylene production.
- Tongkun has submitted Overseas Direct Investment (ODI) approval materials to China’s National Development and Reform Commission (NDRC), with adjustments underway based on feedback. The company has secured key environmental permits and completed major steps like umbrella agreements, registrations, and feasibility studies. Core infrastructure, including road networks, camps, and port facilities, is already operational.
- The project has also established strategic partnerships, including a memorandum of understanding with Indonesia’s PT Pertamina Tbk for the potential sale and procurement of refined and chemical products. Construction is expected to take four years, with full production capacity targeted by 2029.

3 Domestic Airports Re-Obtained International Airport Status
- Three airports in Indonesia officially regained their status as international airports as of April 2025. These 3 airports are:

1. Sultan Mahmud Badaruddin (SMB) II Airport (Palembang, South Sumatra)
2. Hanandjoeddin Airport (Tanjung Pandan, Bangka Belitung)
3. General Ahmad Yani Airport (Semarang, Central Java)

- With the addition of these three airports, the number of international airports in Indonesia reach 20 airports.

-end-

REFERENCES

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