Overview

In its pursuit of becoming a high-income country by 2045, the Indonesian government sets a target to elevate the middle-class population to 80 percent, up from the current 20 percent. According to World Bank Data, the middle class in Indonesia has been growing faster than other groups; there are now at least 52 million economically secure Indonesians or one Indonesian in every five. The Indonesian middle class has been a major driver of economic growth as the group’s consumption has grown by 12 percent annually since 2002 and now represents close to half of all household consumption in Indonesia. The middle class forms the backbone of the economy, contributing significantly to economic acceleration. With the nation currently in a demographic bonus period, the productive population exceeds the non-productive.

Latest Update

Java

• BYD Procure Land in Java
  • BYD is likely to announce the location of its factory in Indonesia in At least in early 2026 the factory is targeted to be in commercial production.
  • It was also disclosed that the BYD factory facility would stand on an area of around 109 Ha, giving a massive opportunity for Industrial Estates.
  • There are rumors that DMAS (GIIC) & SSIA (Subang Smartpolitan) enters the radar of BYD’s land investment.

• KITB Applies for Special Gas Pricing (HGBT)
  • The Ministry of Energy and Mineral Resources is considering a special gas pricing for gas buyers of the Cirebon-Semarang transmission pipeline as proposed by KITB to facilitate the manufacturing activities.
  • CISEM Phase I Pipeline Profile (Semarang-Batang section) is a 20” gas transmission pipeline along ± 60 km from Semarang to Batang.
  • This CISEM pipeline was built by the Minister of Energy and Mineral Resources through the Directorate General of Oil and Gas to meet the needs of the Kendal SEZ with a projected gas demand of up to 39.42 MMSCFD from 26 companies until 2026, and Kawasan Industri Terpadu Batang (KITB) with a projected gas demand of 83 MMSCFD from 14 companies in KITB Phase I until 2028.

• Hitachi Secures $40.7m Contract For Power Substation Project In East Java
  • Hitachi Energy, in partnership with local contractor Citicon, has secured a contract valued at US$40.7 million from Indonesia’s state electricity company, PT PLN, for the design, supply, and installation of both a 500 kV and a 150 kV GIS substation in Waru, Sidoarjo Regency, East Java.
  • Positioned in a key location just outside Surabaya, the 500 kV Waru substation serves as a critical hub within Java’s Grid. This initiative is a strategic component of PLN’s efforts to bolster and extend the grid, facilitating Indonesia’s transition towards carbon neutrality by enhancing the reliability of the power network in Surabaya and its vicinity, thus improving energy distribution from East Java to West Java and Jakarta.
  • Surabaya, Indonesia’s second-largest city with a population of nine million has evolved into a diverse metropolis and a prominent center for business, trade, and industry. Under this contract, Hitachi Energy will provide a comprehensive solution that includes:
    • Two diameters 500kV GIS substation with LCC configuration
    • A 150kV GIS substation with ten bays
    • Two interbus transformers (500/150kV – 500MVA)
    • One power transformer (150/20kV – 60MVA)
    • Complete control, protection, automation, and telecommunication systems
  • Hitachi Energy’s commitment to meeting the project’s local content requirements was a key factor in securing the contract. The company’s local manufacturing capabilities, alongside its technological solutions and engineering expertise, were instrumental in this achievement. The implementation of GIS technology, known for its compactness and safety, along with the automation of the substations, aligns with PLN’s goal to promote a flexible, secure, and sustainable energy transition. This contract marks the largest single order for a combined 500kV and 150kV GIS substation that Hitachi Energy has received in Indonesia.

Outside Java

• Riau Island has a Total of 5 National Strategic Project (PSN)
  • With the establishment of Wiraraja Industrial Estate on Galang Island and Toapaya Industrial Estate on Bintan Island as National Strategic Projects (PSN) on March 18, 2024, Riau Islands Province currently has 5 PSN – Wiraraja Industrial Estate, Toapaya Industrial Estate, Rempang Eco-City Project, Ladi Island Industrial Estate, and Tanjung Sauh Industrial Estate.
  • Wiraraja Industrial Estate has an area of 3859 Ha, of which 2600 Ha will be used for solar farm and green energy, and the 989 Ha will be used for industries supporting renewable energies. The total investment for the industrial estate reaches IDR 226 Trillion, aiming to exercise the concept of green industry and smart-eco industrial park.
  • Toapaya Industrial Estate has an area of 1000 Ha, with a total investment of IDR 120.5 Trillion will focus on the ammunition and weapons industry, caustic soda industry, oil refinery, petrochemical industry, steel smelting industry shipyard, and recycle Planned to begin construction this year, Toapaya will also be equipped with a port to support logistics activities.
  • Rempang Eco-City project has an area of 7572 Ha, which is handled by Artha Graha’s subsidiary, PT Mega Elok Graha (MEG). The initial investor to build the factory is Xinyi Glass Holding, with Rp175 trillion investment values to build a glass factory in a 2300 Ha of However, it is still unclear when this project can be started with strong rejection from the locals and land acquisition issues.
  • Ladi Island Industrial Estate has an area of 300 Ha. Information about Ladi Island Industrial Estate is still relatively minimal. Ladi Island will reportedly lease land to tenants who want to dispose of medical and industrial waste these wastes are processed into biodegradable waste (zero waste) and fuel for power plants in the
  • Tanjung Sauh Industrial Estate, has an area of 843 Ha, is also nominated as Tanjung Sauh SEZ will carry out production and processing related to the electronic component, assembly and heavy industry, and will develop steam power and solar energy with a capacity of 4×100 MW. Based on its SEZ application, the industrial park could positively impact the GRDP of Riau Islands Province by Rp166.81 trillion over 30 years.

Flash News

• Colliers Prediction for Indonesia
  • Colliers Indonesia sees that the Industrial Park has entered the Industry 0 era with the implementation of smart systems and the integration of environmentally friendly concepts in the development of infrastructure and supporting facilities within the industrial zone, that involves IoT and AI for efficiency logistics purposes
  • In 2023, the data center sector accounted for 31% (67.4 hectares) of the total land traded and is expected to remain the leading demand driver. This demand is propelled by advancements in IT, digital transformation, increased internet use, smart device proliferation, and a surge in big data and AI interest.
  • Demand is also expected to emerge from other industry segments such as automotive, FMCG, chemical, logistics, electric vehicle and industries other than data centers.
  • Continuous improvement is required, especially for Environmental, Social and Governance (ESG) aspects.

• Chemical Sector Movement in 2024
  • The Minister of Industry claims that investment realization from the chemical industry has reached US$ 300 million throughout 2022-2023.
  • Director of Industri Kimia Hulu, Putu Nadi Astuti said that PT Asahimas Chemical and PT Nippon Shokubai Indonesia carried out the realization of US$ 300 million.
  • In addition, there are still several projects for the chemical industry with large investment values that have not been realized. The Ministry of Industry said PT Lotte Chemical Indonesia will realize investment to produce ethylene, propylene, and plastic raw materials worth US$4 billion by 2025.
  • In Kalimantan, PT Pupuk Kalimantan Timur plans to invest US$233 million in soda ash, which is expected to start operating in The state-owned company also plans to invest US$705 million in coal gasification to produce ammonia in East Kalimantan by 2027.
  • From the West Java project, there is Pertamina-Polytama Propindo 2 which is pouring US$322 million to the project to produce polypropylene, and propylene which is targeted to operate in 2027.
  • In Papua, there are two projects currently underway; the first is the development of a US$1 billion natural gas-based methanol to olefin industry called the Bintuni Bay Petrochemical Industrial Estate project. The second is the Ammonia-Urea project in Fakfak Regency, which is targeted to operate in 2027. However, the Ministry of Industry still cannot mention the investment value for this project.

• Investor Daily’s Appreciation Gala
  • Dozens of companies were awarded on Tuesday for their commendable ESG standards during the appreciation gala hosted by the business newspaper Investor Daily, an affiliate of B-Universe Media Holdings.
  • Many investors use ESG standards to screen their investments, favoring companies that promote responsible business practices to safeguard the environment and support the local community.
  • While ESG investing is becoming a global trend, it remains relatively new for most companies in ESG investing generates not only financial benefits but also a positive impact on society and the environment.

Benchmark

Standard Factory Building (SFB)

Standard Factory Building (SFB) emerges as a new type of industrial property in Indonesia’s industrial property market along with the development of industrial activities and technologies. Unlike any other type of industrial property, SFB doesn’t need specific spatial requirements and is developed in a large number with a typical design. Nevertheless, market demand for this property is increasing, whether to sell or rent.

• GIIC
  • GIIC has 11 units of Standard Factory Building that has been built with 3 types of sizes: type A 1,068/1,740 sqm, type B 2,274/4,122 sqm, dan type C 1,206/2,306 sqm, and has a price range of around IDR 85,000 per sqm per month.

• KIIC
  • KIIC has a total of 12 Standard single-story factory with and area of 1,400 – 3,500 sqm; Minimum contract period is 3 years, that can be renewed and cancelled before expiry (conditions applied).

• SIER
  • The number of Standard Factory Buildings owned by SIER is 102 units with sizes ranging from 840 sqm to 3,600 sqm located in Surabaya, Sidoarjo, and Pasuruan with the specifications below:
    • Electricity supply/PLN Power 23 kVA up to 41,5 kVA
    • Standard contract 2 years (extendable)
    • Deposit guarantee 4 month rentals that will be fully returned by the end of the rent

• Gresik Industrial Park
  • KIG has Ready-to-Use factory buildings, that consist of offices and workshops that can be rented by investors, with variety of sizes 960 sqm/2,016 sqm & 1,920 sqm/4,619 sqm. Minimum rental period is 3 months. Rate starts from Rp33,500/sqm/month.

• Bukit Indah
  • Bukit Indah has 5 types of Standard Factory Building that can be rented:

• Jababeka
  • Land size: 1,426 – 3,239 sqm
  • Clean water supply: 10m3/day
  • Power supply: 50 KVA

• Kendal
  • Kendal provides Semi-Detached Factories that can be used by industries to accelerate their operation, both for production and office. It has 2 floors with a land size of 1,736 sqm and building area of 918 sqm.

-end-

REFERENCES

• • Skylight Analytics Hub
  • https://otomotif.kompas.com/read/2024/03/21/173100315/byd-beli-tanah-109-hektar-buat- pabrik-baru-di-indonesia
  • https://www.petromindo.com/news/article/hitachi-secures-40-7m-contract-for-power- substation-project-in-e-java
  • https://www.ruangenergi.com/psn-kit-batang-dapat-harga-gas-bumi-tertentu-dari-kementerian- esdm/
  • https://bit.ly/NewsUpdate21032024 https://deltamas.id/greenland-international-industrial-center/ https://kiic.co.id/
  • https://sier.id/ https://kig.co.id/EN/home/ https://www.kotabukitindah.com/home https://www.jababeka.com/id/home/ https://www.kendalindustrialpark.co.id/ https://bit.ly/NewsUpdate04032024
  • https://wartakota.tribunnews.com/2024/03/09/aen-mall-deltamas-akan-dibuka-22-maret-2024- diklaim-terbesar-se-asia-tenggara
  • https://ekonomi.bisnis.com/read/20240301/257/1745509/kemenperin-investasi-sektor-kimia- tembus-rp471-triliun-sepanjang-2022-2023

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