China Interested to Develop Industrial Zone in North Kalimantan
Several Chinese companies that are ranked in the Fortune 500 are exploring investment in Indonesia, including North Kalimantan, as part of their follow-up initiative after the Belt and Road Forum for International Cooperation (BRF) that was held on 14–15 May 2017 in Beijing. This event, visited by Indonesian President Joko Widodo, is a platform for working out action plans for investment in the areas of infrastructure, energy and resources, production capacity, trade, financial cooperation, and the identification of major projects.
About a dozen Chinese companies have expressed their interest to invest in the development of the industrial zone in Tanah Kuning, North Kalimantan. These companies are active in various sectors, including the management of water resources, power plants, oil and gas, chemicals, pharmaceuticals, logistics, construction and textiles. The companies are particularly interested due to the presence of fiscal incentives offered by the Indonesian government (to attract investment), such as tax allowance and tax holiday.
For example, Chen Zemin, General Director of Zhengzhou Demeter New Energy Technology Co Ltd, said the company is interested to invest in the North Kalimantan industrial zone and will send a delegation to inspect the zone within three months. Other Chinese companies interested to invest in this industrial estate are MEHEO and China Power International Development Ltd.
Other Indonesian provinces that are on the radar of Chinese companies are North Sumatra and North Sulawesi.
Based on data from the Investment Coordinating Board (BKPM), China is the third-largest investor in Indonesia, after Singapore and Japan (although a significant amount of investment from Singapore actually involves subsidiaries of Chinese companies). Investment realization from China into Indonesia's manufacturing sector was 12 percent of total investment in this sector last year.
Indonesian Industry Ministry's Director for Industrial Area Development Imam Haryono said investment from China in the development of industrial zones is important as they have the financial power, technology and network. Indonesia, on the other hand, has the raw materials (commodities, energy resources) and the strength of the domestic market.
The industrial zone in Tanah Kuning (North Kalimantan) will be developed on a 11,000 hectares plot of land. It will focus on the bauxite and aluminum processing industry. However, the area will also need additional infrastructure such as an international harbor. It therefore requires USD $1.5 billion worth of investment.
North Kalimantan is a strategic location toward China, while the area holds plenty of energy commodities.