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Indonesia reports US$850m in factory investments, says billions committed

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Seven companies would soon relocate factories to the South-east Asian nation worth a combined US$850 million, most moving from China, with a potential for billions more from another 17 interested firms.

[JAKARTA] Indonesia's investment board on Tuesday said seven companies would soon relocate factories to the South-east Asian nation worth a combined US$850 million, most moving from China, with a potential for billions more from another 17 interested firms.

The announcement came in a presentation to President Joko Widodo about an industrial park in Java, which hopes to capitalise on the appetite to relocate manufacturing from China to lower risks of supply chain disruption.

Indonesia, however, faces stiff competition in the region from preferred destinations like Thailand and Vietnam.

The investments include a US$150 million factory in Banten for tyre-maker Kenda Rubber Industrial and US$90 million from audio systems maker Meiloon Industrial to set up in West Java, the board BKPM said. Both are Taiwanese.

Japanese vehicle parts maker Sagami will spend US$50 million on a plant in North Sumatra and electronics giant Panasonic will invest US$30 million in Jakarta.

US solar lights maker Alpan would spend US$14 million on a factory in Central Java, BKPM said.

Those projects were all being moved from China, according to BKPM. It was not clear if all were new investments and a spokesperson for BKPM was not available.

Others included a US$378 million factory for South Korea's LG and US$138 million from Japan's Denso for a car part plant, both in West Java.

Some of the firms' executives were featured in the video expressing their commitments. Some local offices of the companies could not be reached by Reuters, while others did not immediately respond to requests for comment.

"Today there are seven who are definitely coming here. Seventeen others have committed," Mr Widodo said.

"I order that they all be served well."

Industry experts say a shakeup in global supply chains is set to continue as a result of the coronavirus, with manufacturers keen to reduce their dependence on China and exposure to ongoing US-China trade tensions.

The 17 companies Mr Widodo referred to represented a potential investment of US$37 billion combined, BKPM said.

Among those was LG Chem which is considering a US$9.80 billion investment in an electric vehicle battery factory integrated with a smelter.

REUTERS

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