Top 3 Industries to Invest in Semarang

Recently, Jakarta has ceased as Indonesia’s sole magnet for business enthusiasts. Over half of the population is 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 is an excellent way to tap into its growing business opportunities.

This shift in investing in Semarang is accelerating 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, is strategically located. It enjoys the proximity of many big cities 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, international airports and seaports 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 land price 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.

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Governmental Support

Indonesia continues to develop the Kendal Industrial Park, a flagship project launched in 2016 to boost Central Java’s economic growth. The area has since attracted increasing foreign investment, with Singaporean investors among the most active participants. Government policies that encourage new business ventures in the region support this.

Big players such as Coca-Cola or Kubota (a machinery manufacturer) have already built their factories in the city or adjacent towns. These factors indicate that Semarang is nowadays the right place to launch 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. Thanks to investments in various sectors, its Gross Regional Domestic Product (GRDP) has consistently shown positive growth in recent years.

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.

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2. Infrastructure Development

One key factor 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 investors several advantages. 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

The food and beverage industry remains one of the fastest-growing sectors in Indonesia. Recent data shows continued strong performance, driven by rising consumer demand, significant investments, and ongoing government support. This momentum positions the sector for further expansion in the coming years.

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

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

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Textile Industry

Clothing manufacturing in Semarang continues to expand, with the city attracting numerous textile enterprises thanks to its competitive labor costs and strong support from local authorities for industrial growth.

Semarang’s textiles are widely exported to key markets such as China, Japan, and the USA, while demand from Turkey and Egypt also significantly boosts sales. Industry leaders now see further potential in exploring new opportunities across other Middle Eastern markets.

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.

Choose the Right Investment with InCorp Indonesia

With its thriving industries, strategic location, and supportive business environment, Semarang offers immense potential for investors seeking sustainable growth in Central Java. InCorp’s Semarang office will guide you through every step of your business expansion. Fill out the form below, and our team will assist you in making the most of your investment in Semarang.