Market Commentary: Progress of Patimban Port as an opportunity for industrial estate development and Indonesia's investment climate

1. How will the acceleration of the development of Patimban Port affect the readiness of industrial estate establishment in the surrounding area?

The growth of industrial estates always follows infrastructure developments. The finalising of the feasibility study for the toll road access to port at Patimban, and the recent start of the auction process have been eagerly awaited by many parties.

The connectivity between Patimban and several areas such as Subang and its surroundings will have a positive impact. Areas such as Cibitung, Cikarang and Karawang have quite a high average land price. Hence, there is potential for the development of a new industrial area at Subang and in surrounding areas, where land prices are relatively lower. Further, in Subang, industrial landlords or occupiers will be closer to the new port. Patimban Port, which is projected to provide a similar level of services as Tanjung Priok, but with easier access from Bekasi-Karawang-Subang areas, has great potential and is likely to become very attractive.

Considering the port development is still in the initial stages, the market surrounding it has not been established, but industrial estates will be launched in the near future. Now is a good time for industrial areas to start getting ready, especially those that are still in the early stages of development. Many companies have conducted market feasibility studies, especially for areas in Subang and its surroundings.

2. What are the property investment opportunities in the current unstable economic environment?

Patimban has become a new magnet for the growth of industrial areas and the development of existing or current corridors. Subang is currently the most popular area because, besides being close to Patimban, it is also located in the midst of West and Central Java. The government’s massive infrastructure development connecting West and East Java will further enhance the strategic position of Subang. It is also supported by the operations of Kertajati Airport, 40km from Patimban (through Cipali Toll Road). 

Being in a strategic location, companies and industries located in Subang have the potential to increase the distribution of their products wider and faster. Several companies have moved or expanded to Central Java, due to lower land price and a lower regional minimum wage (UMR). This is applies mostly to labour-intensive companies

Hopefully, the Indonesian Government’s new policy will attract both local and foreign investors. However, a key factor in attracting investors, especially foreign investors, is the presence of clear and fixed investment regulations. This factor could encourage foreign investors to set up businesses in Indonesia, instead of in other ASEAN countries, such as Vietnam and Thailand.


3. For industrial estates that are in the preparation or development stages, what kinds of industry have the potential to grow in the area surrounding Patimban Port?

The automotive industry has the potential to operate in Patimban, especially in areas adjacent to the port. The new automotive trend towards electric cars should create demand for industrial space for this product. Generally, the automotive industry requires large areas of land, and acts as a trigger for the establishment of companies specialising in automotive derivative products in nearby areas.

Interest in the Subang area and its surroundings also reflects a positive outlook for the development of industrial estates linked to the development of the port at Patimban. The growth in logistics, e-commerce, and cold storage facilities also has the potential to fill these industrial areas. We consider that even though the current business environment is sluggish, there is potential for continued growth in these industries.

This means that now is the right time for developers and investors to get ready. The preparation stage will take quite a long time, but if a start is made now, by the time industrial areas are filled and the occupiers have start operations, Patimban Port will be finished and operating at an optimal level.

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