Post by : Badri Ariffin

Jakarta: Indonesia is reshaping its industrial development strategy by placing greater emphasis on maximizing the performance of existing industrial estates rather than continuously expanding through new land development. The policy shift reflects the government's broader objective of strengthening long-term industrial competitiveness, attracting higher levels of investment, and creating a more efficient manufacturing ecosystem. Speaking at the National Working Meeting of the Industrial Estates Association (HKI) in Jakarta on Thursday, Industry Minister Agus Gumiwang Kartasasmita said the success of industrial estate development should no longer be measured by the number of new estates established. Instead, the government will focus on occupancy levels, investor confidence, operational efficiency, and the economic value generated within existing industrial zones.

Occupancy to Replace Expansion as the Key Performance Indicator

According to the minister, simply increasing the number of industrial estates without ensuring they are fully occupied does little to improve Indonesia's competitive position. He stressed that vacant industrial land represents unused economic potential and that future growth depends on making existing estates more productive and attractive to businesses. The minister said industrial estate success should be measured by how effectively businesses operate within these zones, how much Investment they attract, and how many employment opportunities they generate, rather than by the amount of land developed.

Industrial Estates Expected to Become Complete Business Ecosystems

Agus explained that industrial estate operators must move beyond their traditional role as providers of land and utilities. Instead, they should develop integrated industrial ecosystems offering investment facilitation, supply chain connectivity, innovation hubs, workforce development, and support for environmentally sustainable industrial operations. Such improvements, he noted, will help Indonesia compete more effectively for international Investment while supporting long-term industrial transformation.

180 Industrial Estates Drive Investment and Employment

Government data show that permits have been issued for 33 new industrial estates over the past three years, increasing the nationwide total to 180. Together, these developments have attracted approximately Rp6,800 trillion (around US$420 billion) in realized Investment and created employment opportunities for nearly 2.36 million people. These figures demonstrate the growing importance of industrial estates in strengthening Indonesia's economy and supporting national development goals.

Infrastructure and Renewable Energy Remain Top Priorities

To maintain this momentum, the minister encouraged developers to strengthen the investment climate by simplifying licensing procedures, improving transport and logistics infrastructure, and ensuring reliable energy supplies, particularly from renewable sources. He said investors increasingly consider infrastructure quality, regulatory efficiency, and sustainable energy availability when selecting locations for new industrial projects.

Global Supply Chain Changes Create New Opportunities

Agus highlighted ongoing shifts in global supply chains as a major opportunity for Indonesia. As multinational companies diversify their production bases, Indonesia has the potential to establish itself as a leading Manufacturing hub by providing competitive industrial infrastructure, skilled workers, and business-friendly policies. The government believes these international trends can accelerate industrial growth and attract additional foreign investment over the coming years.

Manufacturing Continues to Power Indonesia's Economy

Indonesia's economic performance continues to support this strategy. During the first quarter of 2026, the country's economy expanded by 5.61 percent, with the Manufacturing sector contributing the largest share of overall growth at 1.03 percentage points. The sector itself recorded annual growth of 5.04 percent, compared with 4.55 percent during the same period in 2025. According to the minister, Manufacturing remains the backbone of Indonesia's economy. The sector contributes 19.07 percent of national GDP, accounts for 36.49 percent of total realized Investment, generates 82.03 percent of non-oil and gas exports, and provides employment to more than 20 million Indonesians.

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Indonesia Aims to Become a Global Manufacturing Destination

With a renewed focus on productivity, sustainability, and investor-friendly reforms, Indonesia is positioning itself to become one of Asia's leading industrial destinations. By maximizing the performance of existing Industrial Estates, strengthening infrastructure, and expanding Manufacturing capabilities, the government hopes to drive long-term economic growth, create more jobs, and enhance the country's global competitiveness.

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