Japan's Itochu to expand industrial park in Indonesia

13, Oct. 2021

Makoto Yamaguchi, president director of Karawang International Industrial City (2nd from R front) and Cellica Nurrachadiana, regent of Karawang Regency (3rd from R front), attend a ceremony marking the start of development work for additional land at KIIC, an industrial park in Karawang Regency in West Java, Indonesia, on Oct. 12, 2021. (NNA/Kyodo)
Makoto Yamaguchi, president director of Karawang International Industrial City (2nd from R front) and Cellica Nurrachadiana, regent of Karawang Regency (3rd from R front), attend a ceremony marking the start of development work for additional land at KIIC, an industrial park in Karawang Regency in West Java, Indonesia, on Oct. 12, 2021. (NNA/Kyodo)

JAKARTA, NNA - Japanese trading house Itochu Corp. has begun developing a 105 hectare site to be added to its industrial park in Indonesia, with an eye to selling it to Chinese and South Korean companies in addition to Japanese clients.

Itochu said it has decided to expand Karawang International Industrial City in Karawang Regency, West Java, as it has already sold more than 90 percent of the existing plots, mostly to Japanese companies, at the industrial park about 60 kilometers east of central Jakarta.

The industrial park is located about 80 kilometers from Soekarno-Hatta International Airport, the main gateway to Jakarta, and around 60 kilometers from the port of Tanjung Priok.

After the expansion, the total area of the industrial park will be about 1,500 hectares. Itochu has developed and operated the estate through its joint venture with Indonesian conglomerate Sinar Mas Group since construction began in 1993.

Development work for the additional land, purchased in December last year, began Tuesday. Clients may start building their facilities on the land as early as the January-March quarter of 2022, before the planned completion of the development work in the first half of 2023.

Of the 105 hectare site in the southwestern part of the industrial park, 16 plots occupying about 70 hectares will be sold. There have been inquiries from Japanese, Chinese, South Korean and local companies, and negotiations are under way with potential clients considering building plants or logistics facilities, Itochu said.

PT. Karawang Tatabina Industrial Estate, in which Itochu and Sinar Mas each has a 50 percent stake, develops and operates the industrial park. The cost of the expansion has not been disclosed but 13 billion yen ($114.6 million) is expected from the sale of land.

Karawang International Industrial City has set offer prices of 190 to 200 dollars per square meter of land to be sold. Makoto Yamaguchi, president director of KIIC, said the price is about 10 to 20 percent lower than land in an industrial park in nearby Bekasi Regency, West Java.

Most of the around 170 companies operating in the industrial park are Japanese. Two South Korean and two Taiwanese companies are among them but currently there are no companies from mainland China.

"There remain investments by Japanese companies, which have so far been the main targets of the business, but it seems that investments from major industries are almost complete," Yamaguchi said, adding sales efforts will be directed at Chinese and South Korean companies.

KIIC will also focus sales efforts on data center operators and other industries sensitive to operational risks, as the industrial park has infrastructure advantages, including a preferential electricity supply deal with Indonesian state utility PT. PLN, he said.

He said KIIC is studying the feasibility of building a third logistics facility in the industrial park as the existing two rental warehouses are used by Itochu affiliates. (NNA/Kyodo)