Investors from all around the world are interested in investing in developing countries mainly because of their low labour and production costs and easy access to resources. As one of the developing countries with the fastest economic growth, Indonesia has become an enticing investment destination for quite some time. In addition to the low expenses and access to resources, Indonesia is known for its huge population and the tremendous growth of its middle class.
Investors who are interested in investing in Indonesia, both local and foreign, must seriously consider Central Java as their next investment destination. This article discusses the investment value and top investment sectors in Central Java in the first semester of 2020 and reasons to invest in Semarang.
In the first semester of 2020, Central Java ranked no. 10 in terms of investments from foreign owned company (PT PMA) and ranked no. 4 when it comes to investments from locally owned company (PT PMDN). Details can be seen in the following tables.
PT PMA Investments across Indonesia
| No. | Province | Investment (US$ Thousand) |
| 1 | West Java | 2,266,727.4 |
| 2 | DKI Jakarta | 1,762,735.6 |
| 3 | North Maluku | 994,583.4 |
| 4 | East Java | 868,752.8 |
| 5 | Central Sulawesi | 793,062.1 |
| 6 | Riau Islands | 767,472.8 |
| 7 | Banten | 734,407.2 |
| 8 | Sulawesi Tenggara | 688,786.8 |
| 9 | North Sumatra | 640,883.9 |
| 10 | Central Java | 625,974.0 |
| 11 | Other Provinces | 3,467,051 |
| Total | 13.610.437,1 |
PT PMDN Investments across Indonesia
| No. | Province | Investment (US$ Thousand) |
| 1 | East Java | 2,793,648.2 |
| 2 | DKI Jakarta | 1,812,828.3 |
| 3 | West Java | 1,810,078.5 |
| 4 | Central Java | 1,372,103.0 |
| 5 | Riau | 1,088,302.9 |
| 6 | Banten | 720,468.6 |
| 7 | North Sumatra | 715,171.2 |
| 8 | East Kalimantan | 692,686.0 |
| 9 | Riau Islands | 422,797.4 |
| 10 | Lampung | 371,320.8 |
| 11 | Other Provinces | 3,434,497 |
| Total | 15,233,901.5 |
With regard to industries, the following tables detail investments in Central Java from PT PMA and PT PMDN.
PT PMA Investments in Central Java
| No. | Industry | Investment (US$ Thousand) |
| 1 | Furniture industry | 6,722.5 |
| 2 | Apparel industry | 32,014.2 |
| 3 | Big trade, not cars and motorbikes | 5,014.3 |
| 4 | Other processing industries | 4,395.5 |
| 5 | Timber industry, goods made of wood and cork (excluding furniture) and wicker articles of bamboo, rattan and the like | 483.5 |
| 6 | Food industry | 6,170.8 |
| 7 | Leather industry, leather goods and footwear | 58,694.8 |
| 8 | Textile industry | 31,172.1 |
| 9 | Chemical industry and chemical products | 6,003.9 |
| 10 | Provision of food and beverages | 449.1 |
| 11 | Others | 474,853.3 |
| Total | 625,974.0 |
PT PMDN Investments in Central Java
| No. | Industry | Investment (US$ Thousand) |
| 1 | Big trade, not cars and motorbikes | 18,682.5 |
| 2 | Retail trade, not cars and motorbikes | 12,583.0 |
| 3 | Food industry | 113,373.3 |
| 4 | Trade, repair and maintenance of cars and motorbikes | 3,260.7 |
| 5 | Civil building construction | 3,303.8 |
| 6 | Textile industry | 21,588.1 |
| 7 | Human health activities | 33,010.5 |
| 8 | Building construction | 1,530.4 |
| 9 | Rubber industry, rubber and plastic goods | 6,862.1 |
| 10 | Timber industry, goods made of wood and cork (excluding furniture) and wicker articles of bamboo, rattan and the like | 5,233.7 |
| 11 | Others | 1,152,674.9 |
| Total | 1,372,103.0 |
As the biggest city and capital of Central Java, Semarang enjoys a privileged location that offers proximity to many big cities, including Jakarta, Bandung and Surabaya. Its developed infrastructure has made it possible to access the popular business hubs as well as the more remote areas conveniently. In addition, it now has a Refuse–Derived Fuel (RDF) project, converting municipal solid waste (MSW) into electrical energy.
What is more, the labour force in Semarang is much bigger compared to a small city like Jakarta, making it easier and quicker to secure the top talents to support the growth of your company. When talking about labour cost, on average the wages are relatively lower compared to Jakarta. This helps to reduce expenses, especially when you are engaging in a labour-intensive industry like manufacturing.
Semarang is also known for its massive government support. Investors can enjoy investment-friendly system to start businesses in the city. In addition to the implementation of the Online Single Submission (OSS) system, Semarang has also implemented what is called the e-government. The entire investment and licensing process has been simplified. It also allows investors to keep up with the process online. A total of 148 online service applications have been created and integrated to provide entrepreneurs with convenience, accuracy and security.
Finally, Semarang is a wonderful place to start and run a business, thanks to its assimilation with numerous cultures, such as Chinese culture, Arabic culture, European culture and Javanese culture. It is also interesting to know that Central java ranks no. 13 for index of religious harmony, and Semarang as a city ranks no 19 for index of religious harmony.
Potential investments that are advised by the city’s mayor include light rail transit, PSEL Jatibarang, Simpang 5 underground, Semarang Technopark and Semarang Expo Center.
As a leading consulting company in Indonesia, Cekindo offers a suite of market-entry solutions and corporate services to assist you with your investment. Our team of professional consultants and experienced legal specialists can provide you with expert guidance on company registration, business licensing and work permit applications, among others.
Cekindo with its office in Semarang is ready to assist you in expanding your business to join other successful entrepreneurs in the city or other regions in Central Java. Fill in the form below.
