Indonesia Attracts 7 Foreign Companies' Factories... Jobs Bring Smiles

LG Chem and Panasonic TV Production Base Relocation
Developing Southeast Asia as a Key Electronics Hub
Creation of 30,000 New Jobs Brings Economic Good News
President Joko Widodo Emphasizes Continuous Attraction

[Image source=EPA Yonhap News]

[Asia Economy Jakarta Correspondent Sujin Choi] Indonesia has recently attracted production plants from seven foreign companies, including South Korea's LG Chem. Indonesian President Joko Widodo expressed an encouraging response, calling it "good news for the stagnant Indonesian economy."

According to local media such as The Jakarta Post on the 7th, the Indonesia Investment Coordinating Board (BKPM) announced that seven global companies, including South Korea's LG Electronics and Japan's Panasonic, have decided to build production facilities in the country. It added that approximately 30,000 new jobs will be created through the relocation of factories. Besides LG and Panasonic, the companies include Thailand's audio equipment maker Mayrun, tire manufacturer Kenda, Japanese rubber maker Sagami, automotive parts maker Denso, and U.S. lighting manufacturer Alpan. Alpan decided to relocate its factory from Xiamen, China, to Central Java, Indonesia, due to the inability to bear the 25% import tariff applied when exporting from China to the U.S.

In particular, Panasonic and LG Electronics plan to make Indonesia a key hub for electronic devices in Southeast Asia, signaling fierce competition. Panasonic announced plans to develop the largest hub for household electronics in Southeast Asia, while LG Electronics announced it would relocate part of its TV production line from Gumi, Gyeongbuk Province, to develop a TV production base for the Asian market.

From the Indonesian government's perspective, the significance lies in attracting a large number of companies amid economic difficulties caused by the recent spread of the novel coronavirus (COVID-19). Indonesia has been highly dependent on Chinese capital, but the pandemic has had a fatal impact on foreign investment. As a result, foreign direct investment (FDI) in the first half of this year amounted to $6.8 billion, a 9.2% decrease compared to the previous year. Especially, local companies highly dependent on China are even considering closure due to the U.S.-China trade conflict.

President Joko Widodo promised to actively support the relocation of companies' factories. During a recent visit to the Batang Industrial Estate in Central Java, he instructed the Investment Coordinating Board to provide the best services. He also emphasized that if factory sites have not been secured, land will be provided in the Batang Industrial Estate. This industrial estate currently has 450 hectares developed in the first phase, with a total planned area of 4,000 hectares.

President Joko Widodo is committed to continuously attracting production plants. He emphasized that, in addition to these factories, 17 more businesses will be opened in Indonesia. According to the Investment Coordinating Board, these 17 manufacturers are expected to invest an additional $37 billion. This will also enable the creation of 112,000 new jobs. Minister of State-Owned Enterprises Erick Thohir stated that smooth permit procedures will be provided for factories relocating to Indonesia.