New opportunities in Indonesia: Businesses looking beyond Jakarta

New opportunities in Indonesia: Businesses looking beyond Jakarta

IE Singapore is promoting Kendal Industrial Park as a stepping stone for companies looking to venture abroad.

tat wai factory

SEMARANG, Indonesia: Faced with the challenge of finding enough skilled carpenters at home to support its business, Singapore furniture manufacturer Tat Wai Enterprise has cast its net overseas.

“We want skilled craftsmen but there are not many in Singapore,” said Alfred Tan, Tat Wai’s executive director. Attracted by the prospect of cheaper labour, a bigger talent pool and a larger space, Tat Wai decided to expand its footprint in Indonesia.

The company is now a tenant atKendal Industrial Parkin Semarang, also known as Park by the Bay, running a factory spanning 4,000 square metres. Officially opened on Monday (Nov 14), the 2,700-hectare Park by the Bay is a joint venture between Singapore’s Sembcorp Development and Indonesia’s PT Jababeka.

“We need more space and people. Other countries are too far for us. This park is only one and a half hours flight from Singapore and most importantly, we can find the tradesmen that we need over here,” said Mr Tan.

Tat Wai started its operations at Kendal in August and now employs about 30 Indonesians at its factory there. The company hopes to eventually hire and train 100 workers so they can take on more projects in Singapore.

To meet the increasing demand for cost-competitive manufacturing in Indonesia, IE Singapore is focusing on promoting Kendal as one of the destinations for local companies to venture abroad.

It has been encouraging manufacturing companies through seminars to look beyond the traditional investment destinations such as Jakarta and the Batam-Bintan-Karimun area.

“The labour cost is much lower in Central Java. Probably it's like lower than Jakarta by about 50 per cent and at the same time, there are a lot of workers there and they are starting to grow their manufacturing,” said Ivan Tan, IE Singapore’s group director of Southeast Asia and Oceania Group in an interview with Channel NewsAsia.

He added: “What we have been telling the companies is that don't just think of Indonesia as Jakarta. Don't think that only Jakarta has business opportunities. It's a very big country and the way that the government is pushing development is spreading out of Jakarta.”

BUSINESS COUNCIL WILL CREATE MORE INVESTMENT OPPORTUNITIES: SINGAPORE SME

To create more opportunities for local companies to invest in Indonesia, an Indonesia-Singapore Business Councilwill be set up to enhance business networking.

Singapore company Freshening Industries, a wet-towel manufacturer, said the council will be beneficial for companies over the long term.

“Over time, we will meet suppliers and customers who are potential partners in the respective fields that we are in. So I'm sure that over the long term, we will meet the right partners and eventually let the business grow from there,” said the company’s executive director, Jonathan Phoon.

The company set its sights on the Indonesian market five years ago but it faced difficulties in identifying business partners. “The biggest challenge was looking for a suitable partnership. We were lucky that we had no problems of looking for partners but we had the challenge of choosing the right partners,” said Mr Phoon.

He hopes that the council will help companies facilitate the process of finding a “right partner”. “Given the credentials of people that may be round up, it will make the networking more fruitful.”

But it should not just be about networking. Nut snack manufacturer Sun Lim Garden Foodstuffs will be opening a factory in Jakarta next year, and its country manager Ng Gim Tai said it would be good if there are some sharing sessions about the business landscape in Indonesia.

“I think the thing that is lacking is the business landscape - such as having more details about how to bring things out of Semarang, how to link Jakarta and Semarang. These are the small and pertinent points that are good to know,” said Mr Ng.

Meanwhile, CEO of Sembcorp Development Kelvin Teo said that Singapore companies should take this opportunity to expand abroad. “If Singapore companies are coming alone, it's too risky for them. They go find a place, a land to build factory, it's too risky. Perhaps come to my park, perhaps they can mitigate the risk of buying a wrong land or without a title.”

He added: “Indonesia is a big market. Singapore is getting more difficult to do it but if you come to Indonesia and manufacture and serve Indonesians, serve a domestic market, there are tremendous opportunities.”

Source: CNA/jq

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