Indonesia reports $850 million in factory investments, says billions committedIndonesia reports $850 million in factory investments, says billions committed
FILE PHOTO: Workers are seen assembling a Mitsubishi Pajero at the Mitsubishi car factory in Bekasi

By Gayatri Suroyo

JAKARTA (Reuters) – Indonesia’s investment board on Tuesday said seven companies would soon relocate factories to the Southeast Asian nation worth a combined $850 million, most moving from China, with a potential for billions more from another 17 interested firms.

The announcement came in a presentation to President Joko Widodo about an industrial park in Java, which hopes to capitalise on the appetite to relocate manufacturing from China to lower risks of supply chain disruption.

Indonesia, however, faces stiff competition in the region from preferred destinations like Thailand and Vietnam.

The investments include a $150 million factory in Banten for tyre-maker Kenda Rubber Industrial and $90 million from audio systems maker Meiloon Industrial to set up in West Java, the board BKPM said. Both are Taiwanese.

Japanese vehicle parts maker Sagami will spend $50 million on a plant in North Sumatra and electronics giant Panasonic will invest $30 million in Jakarta.

U.S. solar lights maker Alpan would spend $14 million on a factory in Central Java, BKPM said.

Those projects were all being moved from China, according to BKPM. It was not clear if all were new investments and a spokeswoman for BKPM was not available.

Others included a $378 million factory for South Korea’s LG and $138 million from Japan’s Denso for a car part plant, both in West Java.

Some of the firms’ executives were featured in the video expressing their commitments. Some local offices of the companies could not be reached by Reuters, while others did not immediately respond to requests for comment.

“Today there are seven who are definitely coming here. Seventeen others have committed,” Widodo said.

“I order that they all be served well.”

Industry experts say a shakeup in global supply chains is set to continue as a result of the coronavirus, with manufacturers keen to reduce their dependence on China and exposure to ongoing U.S.-China trade tensions.

The 17 companies Widodo referred to represented a potential investment of $37 billion combined, BKPM said.

Among those was LG Chem which is considering a $9.8 billion investment in an electric vehicle battery factory integrated with a smelter.

(Additional reporting by Agustinus Beo Da Costa and Maikel Jefriando; Editing by Martin Petty)