To Encourage Investment of Export-Oriented Furniture Industry, BKPM Chairman Conducted a Promotion in China

Chairman of Indonesia Investment Coordinating Board (BKPM) together with the Ministry of Industry and national furniture entrepreneurs conducted a business forum with the furniture entrepreneurs from Guangzhou, Foshan and Shandong regions. This proactive promotion effort was carried out by the BKPM Chairman to take the momentum of the US-China trade war which made China will relocate their business to the Southeast Asia Region.

Since the Chinese investor’s business culture is highly depending on their government, the BKPM Chairman met directly with Deputy Governor of Guangdong Province, Ouyang Weimin, and Mayor of Foshan, Tan Ping, to encourage cooperation and investment of their furniture companies in Indonesia. BKPM Chairman also conducted a one-on-one meeting with major furniture entrepreneurs and held a business forum attended by 150 furniture entrepreneurs from Shandong and Guangdong Province, namely from Dongguan, Foshan, Shenzhen, and Guangzhou. Their enthusiasm was very high by asking various detailed regulations, the readiness of the supply chain and raw materials, as well as the location offered.

BKPM Chairman, Thomas Lembong, said that during the trade war condition, it was the right time for Chinese furniture entrepreneurs to invest in Indonesia. It is time for China to shift from “the world’s factories” to a country with high-tech and environment-friendly industries. BKPM Chairman also told President Jokowi’s background as a furniture entrepreneur. In this forum, several parameters to improve the investment climate in Indonesia were explained, including the availability of cross-Java toll road infrastructure, Tanjung Mas import-export port, international airports, the presence of furniture polytechnics in Kendal, incentives provided by the Government, as well as cluster locations offered which include the Kendal, Pemalang, and Sukoharjo areas in Central Java Province.

“The Indonesian government invited Chinese entrepreneurs, especially in the furniture sector, to visit Indonesia. BKPM together with the Ministry of Industry, business associations and the Regional Government will seek a courtesy meeting in Indonesia if necessary. We will also arrange several factory and site visits to explore the location of the furniture industry cluster development and the possibility of collaboration with the local furniture industry,” explained BKPM Chairman, Thomas Lembong, on his official statement to the media in Foshan (Friday, 11/10).

Currently, the Government is trying to focus on developing the Central Java Province as a base for large-scale export-oriented furniture industry clusters. But it is also possible for this development to take place in other potential locations.

Although the realization of Chinese investment in Indonesia has experienced a significant increase in the last five years, some homework must be followed up, including the guarantee of wood and rattan raw materials availability, relaxation of provisions on the import of machinery (relocation) and furniture industry raw materials, support from the Regional Government to accelerate and to ease land acquisition, the availability of skilled workers through vocational education, the ease to assign Foreign Workers (TKA) during the factories establishment to operation for technology transfer, obtaining a Limited Stay Permit Visa , Tanjung Emas port readiness to serve export-import activities, as well as security guarantees and protection for large-scale investment.

Therefore, it is necessary to disseminate the public about the positive impact of China investment in Indonesia. Besides, the multiplier effects and trickling down effects to the community in general, and local entrepreneurs in particular, can be realized.

The business forum opened by the Indonesian Ambassador for Beijing, Djauhari Oratmangun, aims to promote investment opportunities in the furniture industry in Indonesia. In a panel discussion session, BKPM Deputy Chairman for Investment Planning, Ikmal Lukman, and Director General of Small and Medium Industries (IKM) of the Ministry of Industry, Gati Wibawaningsih, emphasized the Government’s full support in terms of investment and collaboration in the furniture industry. “The government continues to strive so that investment continues to come in, especially for the furniture sector. One of them is through the provision of fiscal and non-fiscal incentives,” explained BKPM Deputy Chairman for Investment Planning.

The Chairman of the National Furniture Industry Association underlined the readiness of national business actors to collaborate with Chinese entrepreneurs. “Currently, China is the largest furniture exporter in the world, which controls almost 40% of world furniture production. The export value reaches USD 52 billion compared to Vietnam and Indonesia respectively at USD 8.5 billion and USD 1.7 billion,” he explained.

As a follow-up, several Chinese furniture entrepreneurs will visit Indonesia at the Trade Expo Indonesia (TEI) 16-20 October 2019. Furthermore, they will visit Cirebon in West Java and Semarang, as well as several cities in Central Java to explore the location for the furniture industry. It is hoped that these regions will become new furniture clusters that accommodate the relocation of the Chinese furniture industry to Indonesia. They will also hold several meetings with the Central and Regional Governments and national entrepreneurs. Besides, BKPM has scheduled a further visit to Shandong Province, China at the end of 2019 as part of efforts to promote investment in the furniture industry.