Overview

Indonesia’s Manufacturing Index (PMI) recorded an expansion level in March 2024, rose from 52.7 in February to 54.2. As quoted from PMI by S&P Global, the survey conducted in March 2024 showed stronger growth across Indonesia’s manufacturing industry, both in terms of production and new orders.

Latest Update

Java

• AI Development
  • US. chipmaker Nvidia and Indonesian telecommunications company Indosat Ooredoo Hutchison plan to build a US$200 million artificial intelligence center in Solo, Central Java, named “Indonesia AI Nation”. The partnership is part of Nvidia’s growing footprint in Southeast Asia, including Singapore with Singtel and Malaysia with YTL Group.
  • Solo Techno Park was chosen among more than 20 other techno parks considering its recent Having 2 main buildings, the Sembrani Building as a tech hub for research, technology development and innovation and the Gumarang Building as the office for e-commerce Shopee and growth center for local MSMEs, Solo Techno Park secured more collaboration with various global technology companies, such as Shopee with the Shopee Solo Creative & Innovation Hub, Garena with the Gaming & Community Hub, GoTo with the MSME Center, ACER with the first Game Working Space in Indonesia, Bank Mandiri with Digital Box and Mandiri Digipreneur Hub, and SKK Migas with the Oil and Gas Skill Center of Indonesia (OGSCI).
  • At the end of March 2024, Indonesian conglomerate Sinar Mas through its subsidiary PT SMPlus Digital Investama signed an MoU to set up a joint venture with LG CNS, the information technology arm of LG Group, to enter the data center and cloud business in LG CNS is South Korean data center provider, IT services, cloud solutions and digital transformation specialist. Kearney, a global management consulting firm, forecasts the economic impact of AI in Indonesia will reach US$366 billion by 2030, almost one-third of the total of

• Blora Regency Proposed to be an Industrial Park Area in Central Java
  • The Regent of Blora, Arief Rohman, proposed Blora Regency to be included as a location for industrial park development in Central Java to attract more industrial investors, mentioning a natural gas resource in the south (Kradenan) which has been developed by Pertamina and channeled to Tambaklorok, Semarang and Gresik, East Java.
  • The proposal was submitted at the Consultation Meeting of the Revision of the Regional Spatial Plan (RTRW) of the Central Java Provincial Government with the Acting Governor of Central Java and the Ministry of Agrarian Spatial Planning / National Land Agency (ATR / BPN).

• Freeport Gresik Smelter Starts Production in June
  • PT Freeport Indonesia’s copper smelter at JIIPE, Gresik is targeted to enter commissioning in May and start operating in June 2024 with 50% capacity. Full production with 7 million tons of concentrate is targeted to start in December 2024. President Jokowi is scheduled to inaugurate the smelter in June 2024.

• Floating Storage and Regasification Unit (FSRU) Operation by Japan’s Mitsui OSK
  • Japan’s Mitsui S.K. Lines Ltd (MOL) has started commercial operations of its floating storage and regasification unit (FSRU) to supply LNG to a power plant in West Java, Indonesia.
  • The operations of the FSRU, called Jawa Satu, began on March 29. MOL owns Jawa Satu, through PT Jawa Satu Regas, jointly established by PT Pertamina, Marubeni Corporation and Sojitz Corporation.
  • With a capacity of 1,760 megawatts and a storage capacity of 170,000 cubic meters and a regasification capacity of 300 MMscfd, Jawa Satu Power is the first LNG-to- power project in Indonesia, aiming to increase electricity generation through renewable energy sources and reduce the overall cost of electricity generation, uses FSRUs to convert LNG back to its natural gas LNG is transported from BP Tangguh, West Papua, and is integrated with the power plant located in Cilamaya, West Java, via offshore and onshore pipelines.

Outside Java

• Food Estate as SEZ in Merauke
  • The Indonesian Minister of Defense intends to develop a “food estate” program as a Special Economic Zone (SEZ) in Merauke, Papua, for food security to face uncertain global situation.
  • The Ministry of Defense is synergizing with related agencies, such as Minister of PUPR, the Minister of Agriculture, the Ministry of Environment and Forestry, and the Minister of State-Own Enterprise for collaboration in the project.
  • Former Food Estate Projects:
    1. In 1996 – The Peatland covering 1,4-million-hectare area. Project failed because it was canceled by the National Planning In 2015, this former Food Estate peatland became the center of the largest forest and land fires in Indonesia with 125 spots.
    2. In 2008 – Merauke Integrated Food and Energy Estate (MIFEE) covering an area of 23 million hectares (30% of Merauke’s area) and 37 investors, failed because there was no clear concept of land use to investors.
    3. In 2013 – Bulungan Food Estate covering an area of 300,000 hectares in North
    4. In 2013 – Ketapang Food Estate covering an area of 100,000 hectares in West Kalimantan for rice barns.
    5. In 2015 – Rice Estate covering an area of 2 million hectares in Merauke.
    6. In 2021 – Food Estate Gunung Mas, Central Kalimantan, with staging development – 2,000 Ha for its first phase was labeled a National Strategic Project. This project was deemed fail. The land was sandy with 40 cm impermeable layer, unable to absorb water and nutrients.
  • CORE Indonesia Research Associate and IPB Professor, Dwi Andreas Santosa, explained that all the Food Estate programs failed because they could not meet the 4 pillars of land and agro-climatic feasibility, infrastructure feasibility, social and economic feasibility, and technological feasibility.

• Potential Development of Semiconductor in Batam
  • The Minister of Foreign Affairs pays serious attention to the development of the semiconductor industry sector in Batam, claiming Batam as potential location for such investments with massive road infrastructure (and airport) development in the region and the development of the Nongsa SEZ Digital Park as a digital and data center.
  • The government through Batam Concession Agency (BP Batam) will make maximum efforts to approach and convince potential investors to realize investment in the semiconductor field.

Flash News

•  Industrial Parks as National Strategic Projects Targeting Completion in 2024
  • There are 11 industrial parks as National Strategic Projects targeted for completion in 2024 with a total investment of IDR 435.9 Trillion according to Coordinating Minister for Economic Affairs.
  • National Strategic Project (PSN) is President Jokowi’s program to accelerate infrastructure development in the country. Industrial parks with PSN status receives more attention and support from the ministries and agencies in terms of permits and license, in addition to the infra development. The status doesn’t guarantee issues resolutions. Targeting completion means the new developments should be continued without government’ supervision and support.

•  Starlink Enters Retail
  • The Indonesian Government has officially greenlit Starlink, SpaceX’s satellite-based internet service which owns around 60% of the roughly 7,500 satellites orbiting earth, to enter the consumer market with B2C services. Starlink, which initially penetrated Indonesia through a collaboration with Telkomsat for B2B) services is now poised to expand its offerings.
  • Budi Arie Setiadi, Minister of Communications and Information Technology stated for Starlink to venture to B2C, Starlink must establish an Indonesian legal entity and secure an internet service provider (ISP).
  • Starlink will commence its initial phase in the country’s new capital city, IKN Nusantara where it will help complement the existing internet infrastructure at IKN alongside Telkom, giving a massive growth in Indonesia’s telecommunication industry.

• Hydrogen Potential
  • The rapid growth of hydrogen and ammonia as an alternative energy source in the country makes the government move quickly to provide a legal umbrella.
  • The Minister of Energy and Mineral Resources (ESDM) admits that it is preparing a revision of Government Regulation (PP) No. 14/2012 to encourage the purchase of electricity from hydrogen-based power plants.
  • The revised regulation is planned to add a number of articles related to the purchase of electricity from new energy. Moreover, hydrogen has now been included in the New Energy and Renewable Energy Bill (RUU EBT) as a type of new energy.
  • Currently, Pertamina Geothermal Energy (PGEO) is developing a number of green hydrogen pilot projects with strategic partners from several countries. PGEO is working with Keppel and Chevron to penetrate the Singapore market. The pilot projects are conducted in Ulubelu Geothermal Block, Way Ratai; and Gunung Tiga in Lampung.

• Hannover Messe 2024 (22-26 April 2024)
  • Industry trends in focus: AI & Machine Learning, Carbon-Neutral Production, Energy for Industry, Industry 4.0 / Manufacture X, Hydrogen & Fuel Cell. Invited industrial community from automotive, electrical, energy, R&D, Mechanical & Plant
  • Indonesia participated in the event. From industrial park community, besides representatives from HKI association, the press released involvement of Batang Integrated Industrial City (KITB) and Ladi Industrial Park in Riau to seek cooperation opportunities with industrial companies from Europe, which actively promoting sustainable energy transformation.
  • Ladi was reported looking for partners from renewable energy, recycling, material processing sector to cooperate in the smart integrated design & zero emissions factory services, integrated disposal and processing of hazardous and solid waste.
  • Several cooperation agreements have been signed with an estimated investment value of IDR 5 trillion, two of which to support the development in IKN Nusantara, while the rest are:
    1. TechnoGIS and FRAUNHOFER IPK for collaborative research and development of forest fire monitoring.
    2. AI Drone, TechnoGIS and Preneu , Ltd for distribution and development of drone mapping in Indonesia and Asia.
    3. Wuhan Geosun Navigation Technology and Geomars regarding LiDAR distribution for 3D mapping.
    4. Collaboration between Solusi247 and MetalogicaGMbh for embedded system product manufacturing and outsourcing projects.
    5. Strategic partnership between Techbros and Seeed Technology , Ltd.
    6. Cooperation in waste recycling for industrial park in the Riau
    7. Ecadin and TUV Nord for learning system
    8. ATMI IGI Center and Solinatra BV for plastic

-end-

REFERENCES

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