Top 3 Industries to Invest in Semarang in 2024

In recent times, Jakarta has ceased to be Indonesia’s sole magnet for business enthusiasts. With over half of the population numbering at least 130 million individuals. However, in the past few years, urban areas across the country, like Semarang and Central Java, have also shown economic growth. Therefore, investing in Semarang counts as a way to explore business opportunities

This shift of investing in Semarang grows the emergence of new trading hubs like Surabaya, Bandung, Medan, and other rapidly expanding urban centers. Among these rising stars on the Indonesian business horizon, Semarang stands out as a noteworthy contender.

Privileged Location

Semarang, situated on the north coast of Central Java, has a strategic position. It enjoys the proximity of many big cities completed with decent infrastructure within the region and the rest of the island. Besides the roads, Semarang is connected with all significant Javanese cities by railway. In addition, the international airport and seaport serving domestic and overseas destinations facilitate access to remote markets.

Affordable Labour Force

The workforce is plentiful due to the significant migration from other parts of Indonesia, and hiring qualified employees is also becoming more accessible thanks to continuous improvement in the education system in Indonesia.

There are 20 universities within the city, and thousands of future professionals graduate from well-renowned institutions in the nearby Special Region of Yogyakarta every year.

Yet the wages are, on average, lower than in Jakarta, which helps to reduce expenses, especially in labor-intensive industries.

Moreover, the price of the land is also favorable, so it is no surprise that several companies from the traditional industrial area of Jabodetabek (Jakarta, Bogor, Depok, Tangerang, and Bekasi) have already moved to Semarang.

Read more: 5 Facts about Renewable Energy Investments in Indonesia

Governmental Support

Indonesian President Joko Widodo opened the new Kendal Industrial Park in November 2016 as a part of the governmental effort to further the region’s development. Semarang expects investments of at least IDR4.3 trillion by 2021.

Singaporean investors, in particular, expressed prominent interest in new opportunities, and the government seems responsive to their business plans.

Big players such as Coca-Cola or Kubota (machinery manufacturer) have already built their factories in the city or within the adjacent towns. These factors indicate that Semarang is nowadays the right place for launching a profitable company.

Exploring the Long-Term Prospects of Investing in Semarang

Semarang, the capital of Central Java, Indonesia, has a rich history and a promising future. As the country continues to experience economic growth and development, Semarang has emerged as an attractive destination for local and international investors. This article will delve into the long-term prospects of investing in Semarang, focusing on the city’s economic potential, infrastructure development, strategic location, and critical industries.

1. Economic Potential

Semarang’s economic potential is evident in its robust and diverse economy. The city has many industries, including manufacturing, trade, services, and tourism. Its Gross Regional Domestic Product (GRDP) has consistently shown positive growth in recent years, thanks to investments in various sectors.

The growth of the middle class in Indonesia is driving consumer demand, making Semarang an attractive market for retail and consumer goods businesses. Additionally, the city’s thriving manufacturing sector is supported by a skilled workforce, making it a favorable destination for companies looking to expand their production capabilities.

2. Infrastructure Development

One of the key factors contributing to Semarang’s appeal for long-term investments is its significant infrastructure development. The government has invested heavily in improving transportation networks like roads, ports, and airports. This enhances connectivity within the city and strengthens its position as a logistical hub in Central Java.

The ongoing development of the Tanjung Emas Port, one of Indonesia’s oldest ports, is a testament to the city’s commitment to expanding its logistics and maritime capabilities. Improved infrastructure facilitates the movement of goods and supports tourism and trade, making Semarang a pivotal city in the region.

3. Strategic Location

Semarang’s strategic location in Central Java offers several advantages for investors. It is a gateway to the broader Indonesian market, with excellent access to major cities like Jakarta and Surabaya. This geographic advantage reduces transportation costs and facilitates the distribution of goods and services.

Furthermore, Semarang is part of the North Coast Economic Corridor (NCEC), which is envisioned as a critical economic zone in Indonesia. Investments in the NCEC are expected to fuel growth and create new opportunities for businesses in Semarang.

4. Key Industries

Several critical industries in Semarang are poised for long-term growth

• Textiles and Garments: Semarang has a thriving textile and garment industry, benefiting from skilled labor and easy access to raw materials. With the increasing demand for clothing, both domestically and internationally, this sector is likely to see sustained growth.
• Agribusiness: Central Java’s fertile land and favorable climate make it a prime agricultural location. Investments in agribusiness, including food processing and palm oil production, have significant potential for long-term returns.
• Tourism: Semarang boasts cultural heritage sites, such as the Old Town (Kota Lama) and religious landmarks, attracting tourists from Indonesia and abroad. Investments in the tourism sector, including hotels and infrastructure, are expected to flourish.
• Technology and Innovation: With the growth of digital technology, there is a burgeoning tech startup scene in Semarang. Investments in technology and innovation can yield substantial returns as the city continues to adapt to the digital age.

Key Business Fields to Invest in Semarang

Previous paragraphs proved that Semarang should be on the list of anyone considering entering the Indonesian market. Entrepreneurs who deal with food and beverages, textiles, and manufacturing production should pay extra attention – these opportunities are worth investing in the Semarang region.

Food and Beverages

Food and beverages are one of the fastest-growing industries. According to the latest numbers from the Ministry of Agriculture, it grew 9.45 percent in the third quarter of 2017, and further development is expected for this year due to high investments and governmental support.

Moreover, as the world’s most populous Muslim country, Indonesia can become the leading halal food producer. Taking into consideration that some 87 percent of Indonesians are followers of Islam, the sector of halal food processing industry will flourish accordingly.

Producers are highly recommended to obtain halal certification since 2019; all non-certified halal products will become non-halal. Register your halal products now!

Read more: Indonesia Embraces US Investment Opportunities

Textile Industry

Clothing manufacturing in Semarang is also on the rise. About 60 medium-sized and large textile enterprises relocated from Jakarta to the Central Java region in 2017. The affordable workforce and the local authorities’ readiness for the area’s industrial development mainly attract them.

The major export destinations for textiles from Semarang are the ever-growing markets of China, Japan, and the USA. The demand from Turkey and Egypt contributes significantly to the overall sales.

According to the Association of Textile Manufacturers chairman Agung Wahono, the next step is to explore opportunities in other Middle Eastern countries.

Manufacturing Industry

Besides the industries mentioned above, there is a wide range of other fields in which manufacturers will find appropriate facilities for their businesses. For instance, 11 percent of the Kendal Industrial Park tenants are furniture producers, 13 percent are engaged in logistics, and 24 percent produce building materials.

Read more: How Omnibus Law Liberated Shipping Industry in Indonesia for Foreign Investment.

Choose the Right Investment with InCorp Indonesia

InCorp’s office in Semarang is ready to help you expand your business and join the successful entrepreneurs in the Central Java region. Fill in the form below, and we will assist you when investing in Semarang.