Demak investment grows sluggish

Source: Tribun Jateng

ES smiles when he heard the news that Demak has become a not investment-friendly area in Central Java. With 24 years of running a business in Demak, he's well aware of business situation in the area.

He revealed that investment in Demak grows slowly due to disparate vision between policymakers and investors. For example in terms of permits, there is one-door civil service but it has yet to operate efficiently.

ES also had an unpleasant investing experience. At that time, he wanted to register permit for his new business in one-door civil service, but it didn't respond as expected. Because there are so many bureaucratic layers inside the service despite its one-door slogan. He still needed to go to other agencies. This is different in a city such as Jakarta.

"That one door is only to take the registration form, the investor still had to take recommendations from all stakeholders which are not represented in one building, Izin Mendirikan Bangunan (Building Permit) took up to two months to be issued, while my bigger-scale company only one month to be issued, and it was issued on a single door (institution), the relevant institutions are represented in one building," he said.

ES said, Demak is an area with enormous economic potential. Aside from being the industrial crest of Central Java, the area is also rich in natural resources, and its population is fairly large. "There are lots of consideration for investors, ranging from ease of business to the availability of infrastructures such as water, electricity, and land," he said.

The issue of clean water supply, ES stated, the related agency does not have the capability to supply water to all areas, including industrial sector. The statement was in line with the Chairman of Apindo Demak who says Demak has a clean water crisis for the industry. "The clean water problem in Demak district has been ongoing for maybe 514 years since this area was established, water supply has not been able to meet the needs of the community, let alone the industry," he said.

For large companies, ES states, water may not be a problem because they drill wells. But it is not financially viable for small companies. The costs are big. "It is impossible for large industries to rely on clean water in Demak from PDAM, buying water is ineffective and the cost is much bigger, so it would be better to drill wells itself," he explained.

Natural conditions

As for the road, ES assumes, the district road is considered good. More than 90 percent of district roads is accessible. While flood is induced by natural conditions. "We're hoping the development plan for toll road can anticipate rob, because within the construction of tolls there must be specific engineering attempts to cope with surrounding environments, including rob," he explained.

ES revealed, most land in Demak  is controlled by a third party. Thus, he is not surprised by the argument of Apindo Jateng which calls the land in Demak can no longer accommodate investors. If any, the price skyrocketed to unparalleled value. By extending the land use permit while not properly functioned. If the permit can no longer be extended, they will change the name of the legal entity. "The industrial land in Sayung sub-district, for example, is controlled by a certain group, and can't be utilised, possibly because the price is too expensive," he explained.

ES said, the government needs to be involved if you want to boost investment. The land should be self-managed with a variety of supporting infrastructure, so there is a leverage for investors or new companies to do business in Demak. He had an experience where a colleague in 2015 wanted to invest in Sayung, Demak, with a land requirement of 100 hectares to build a factory. But the land was very difficult to buy, so he cancelled the investment.

Lack of interest

The lack of investment in Demak is nothing new. In the Industrial Area of ​​PT. Jawa Tengah Lahan Andalan or Jatengland in Sayung, Demak for example, only has been filled by three companies since 2013.

Marketing Communication of PT Jawa Tengah Lahan Andalan, Rini Arififiani revealed, the total development of the first stage of development in Jatengland industrial area has reached 110 hectares. But only 15 hectares of land have been sold. However, she denied if the lack of investment is due to difficulty in getting consumers. It's just the process of land preparation takes a long time.

Jatengland plans to open 300 hectares of land for industry. The development process is done in three stages. The available facilities are electricity, water, gas, smart IT, etc.

Rini explained, establishing a factory in the industrial area has a variety of benefits. However, the developed area is more integrated to meet the needs of tenants. "Legally Surat Izin Usaha Kawasan Industri (Industrial Business License Permit) is already issued. The waste is well controlled, and free of floods, and many other advantages," she explained.

In order to attract investors, the company has established partnerships with the local government. She remains optimistic that investment in Demak will turn good, especially if the Semarang-Demak toll road project is completed.