JAKARTA: Singapore’s Prime Minister Lee Hsien Loong and Indonesia’s President Joko Widodo held a Leaders’ Retreat in Semarang yesterday to discuss future economic collaboration. President Joko’s state visit to Singapore in July last year triggered an increase in Singapore investments in Indonesia and there is expectation that yesterday’s meeting would keep the positive momentum going.
The two leaders inaugurated an industrial area in Kendal, Central Java. Kendal industrial park is some 25km from Tanjung Emas Port in Semarang, the third largest deep sea port in Indonesia after Tanjung Priok (Jakarta) and Tanjung Perak (Surabaya). The new park is developed by a joint venture between Sembcorp Development and Indonesian developer PT Jababeka, and designed to be a manufacturing hub for garment, automotive parts, food and beverage, cosmetics, and so on. Kendal offers strategic location, cheap land, cheap labour and better infrastructure than in other parts of the country.
The location of the industrial park hints at a new direction for Singapore companies, which are venturing beyond the two most popular investment destinations of Jakarta and Batam. The latter seems to be losing its competitive edge in recent years due to protracted legal uncertainty caused by the Batam regional authority challenging the administrative authority of the Batam Development Authority. Meanwhile, Jakarta and its surrounding areas have seen significant minimum wage hikes which have reduced their attractiveness to labour-intensive industries.
