Pati, Kilaswarta.com -- A South Korean manufacturing company has decided to move its production facility from China to Central Java, specifically in Pati District, with a total planned investment of approximately USD 35 million.

This relocation was confirmed during a visit to South Korea by Indonesia's Chief of the Investment Coordinating Board (BKPM), Bahlil Lahadalia, and State-Owned Enterprises (SOEs) Minister, Erick Thohir, on September 23-24. The visit aimed to solidify the company’s decision to invest in Indonesia.

Bahlil Lahadalia expressed enthusiasm about the development, emphasizing the importance of proactively attracting companies seeking to relocate their operations from China and other countries. This aligns with the directives of President Joko Widodo, who has encouraged efforts to bring foreign investments into Indonesia.

The company behind this move is PT Sejin Fashion Indonesia, which operates in the garment sector. It plans to export all its products, contributing significantly to Indonesia’s economic growth. The relocation is also expected to create up to 4,000 job opportunities, providing a boost to the local workforce.

This initiative is especially timely, as Indonesia continues to grapple with the economic impacts of the COVID-19 pandemic. Lahadalia expressed hope that the company’s presence will help support the national economy during these challenging times.

Sejin's Background and Investment Goals

PT Sejin Fashion Indonesia is a subsidiary of Parkland Co. Ltd., a South Korean company with a longstanding presence in Indonesia. Parkland has been operating in the country’s footwear industry for over 15 years. Building on its experience in Indonesia, the company aims to expand its business operations by establishing the new garment facility in Central Java.

During discussions with Indonesian officials, Sejin requested government support to facilitate the relocation process. The company outlined several critical areas where assistance is needed, including the technical survey and assessment of its machinery, which involves relocating non-new capital goods from its plant in China. Additionally, Sejin sought approvals to designate its new facility as a bonded zone, enabling smoother customs processes and tax benefits.

Further requests included permits for its employees to enter Indonesia during the COVID-19 pandemic, ensuring a seamless transition of key personnel for the operation of the new plant. The company also applied for tax allowances to reduce its operational costs and enhance competitiveness.

BKPM’s Support and Tax Incentives

The Indonesian government, through BKPM, has pledged comprehensive support to ensure the relocation proceeds smoothly. One notable milestone in this partnership is the approval of Sejin’s tax allowance application. This marks the first tax allowance approved by BKPM since the authority to issue such approvals was transferred from the Finance Ministry.

BKPM’s chief, Bahlil Lahadalia, has emphasized the agency's commitment to facilitating Sejin’s relocation and ensuring the company achieves its commercial production target. The goal is to have the facility operational and contributing to Indonesia’s economy by the fourth quarter of 2020.

Boosting Indonesia’s Economic Competitiveness

The relocation of PT Sejin Fashion Indonesia to Central Java underscores Indonesia's growing appeal as an investment destination, particularly for companies seeking alternatives to China amid shifting global supply chains. The government’s proactive approach to attracting foreign investors, coupled with incentives such as tax allowances and bonded zone designations, has positioned Indonesia as a competitive player in the region.

The influx of foreign direct investment (FDI) also aligns with broader efforts to revitalize the national economy. By creating thousands of new jobs, the relocation is expected to benefit the local community and contribute to economic recovery in the wake of the COVID-19 pandemic.

Additionally, the company’s decision to fully export its products demonstrates Indonesia's potential to become a hub for export-oriented manufacturing. This can further strengthen the country’s trade balance and enhance its standing in the global market.

Future Prospects

The successful relocation of PT Sejin Fashion Indonesia’s plant could serve as a model for other companies considering similar moves. With Indonesia’s strategic location, competitive labor costs, and government support, the country is well-positioned to attract more foreign investors looking to diversify their operations away from China.

The Indonesian government’s collaboration with Sejin highlights the importance of providing tailored solutions to meet the specific needs of investors. By addressing challenges such as machinery relocation, customs facilitation, and workforce mobility, Indonesia can build a reputation as a business-friendly destination.

PT Sejin Fashion Indonesia’s relocation from China to Central Java is a significant milestone for Indonesia’s investment landscape. With an investment of USD 35 million and the creation of 4,000 jobs, the initiative is set to deliver economic benefits at both the local and national levels.

The move also reflects Indonesia’s growing competitiveness in attracting foreign investments, driven by proactive government policies and incentives. As Sejin begins its operations in the garment sector, its success could pave the way for more companies to choose Indonesia as their next investment destination. (*)