Raw Materials In Indonesia
(Availability, Convenience, and Cost)
Three things are the main considerations in considering the availability of raw materials in Indonesia, ie.:
- Availability in accordance with the minimum required quantity;
- Ease of obtaining it; and
- The costs required to obtain it, whether it’s the purchase price of raw materials or transportation costs from the source of raw materials.
It should be noted that Indonesia consists of thousands of islands and at least 10 of them are quite large. Each of these islands has different natural resource potentials. So if investors intend to accommodate the three needs above, then it is better if the production location is closer to the location of the raw materials.
For example, if the Investor intends to build a coconut oil industry or coconut derivative products, then it is better to build a production facility on the island of Sulawesi or Sumatra. If the industry is sugar, then preferably on the island of Java or Sumatra. For heavy equipment repair services, preferably in Kalimantan or Papua. If the industry in the tourism sector should be in Bali or Nusa Tenggara, if the Handicraft Industry or Electronic Production it should be in Java Island or Bali Island.
There are many official statistical data from the Indonesian government that show the advantages of each region in Indonesia, it can be used as a reference in deciding where to build production facilities to support raw material needs.
From a legal perspective, the policy in the field of industrial raw materials that has been carried out by the Indonesian government for a long time is to regulate the export and import of industrial raw materials so that domestic availability is sufficient as needed. So there are times when the Indonesian government prohibits the export of certain raw materials (which have not been processed) to ensure domestic sufficiency. And there are times when the Indonesian government prohibits the import of certain raw materials so that domestic raw materials can be absorbed effectively. For now, the legal regulations for industrial raw materials that have a direct impact are those related to the export and import regulations.
As for the latest regulation, as the implementing regulation of the Omnibus Law passed in Indonesia, the Government of Indonesia is currently preparing a more structured scheme in every industrial development center in Indonesia to ensure the adequacy of industrial raw materials, but at the time of writing this article, the scheme has not run optimally. Maybe still needs some time to adjust.
The Indonesian government provides consulting services for potential investors in Indonesia through the BKPM, so that foreign investors can take advantage of these services by contacting the BKPM directly or find out local consultant for your business interest.