Interview: H Soekarwo

How successful has East Java been in regard to attracting foreign direct investment (FDI)?

H SOEKARWO: FDI based on investment licences has seen quite a significant improvement over the last few years, growing from Rp18trn ($1.8bn) in 2010 to Rp44trn ($4.4bn) in 2011, which is an incremental rise of 242%. The main driving factor behind the increase is the fact that we offer a government guarantee. The provincial government will facilitate land acquisition and develop business licences for all investors. Once all of the proper documents have been completed, the licensing process will only take 17 days.

Additionally, East Java has readily accessible energy resources, particularly electricity, with a surplus of 2750 MW in 2012 and an estimated surplus of 4250 MW in 2013, which attracts investors. The labour pool in East Java is open-minded, hardworking and willing to communicate with companies, both foreign and domestic. Should issues arise, the provincial government will help facilitate between the employees and the company.

In order to continually attract foreign investment from overseas, the East Java provincial government has established representative offices in Osaka, Japan; Korea; Paris, France; Shang Hai, China; and Perth, Australia.

Which industries and sectors are being targeted for development in East Java?

SOEKARWO: For the 2010-15 period, we have plans to invest $652m in the province. The three main sectors targeted for development are: farming, particularly in food and beverage; manufacturing, particularly in agricultural machinery and electronics; and the production of raw materials used for industrial consumption, as approximately 80% of raw materials are imported.

Where has investment to the province come from?

SOEKARWO: A multitude of companies have invested in East Java, with some of the largest investments coming from Japan, Korea, China and Singapore. The biggest investment to date is the South Korean firm Cheil Jedang, a global food and bio company. In 2011 the total investment in East Java reached some Rp110trn ($11bn), including Rp70trn ($7bn) from domestic sources and Rp40trn ($4bn) from foreign sources. From January to June 2012, FDI totalled Rp14.77trn ($1.47bn). The progression of FDI in East Java ranks number one in Indonesia. Therefore, it is known as the champion province.

How does East Java factor into the Java Economic Corridor under the MP3EI economic master plan?

SOEKARWO: East Java has become the locomotive of growth, not only for Java Island but also for eastern Indonesia, due to the province’s strengths in logistics and connectivity. Infrastructure priorities include upgrading the harbour, building rail links and toll roads, expanding the Juanda International Airport and establishing more city links within the province.

The initial development of the port, Tanjung Perak, will be finished in 2013, and the facility is scheduled to open in 2014. When the port begins operations, its depth will be 13 metres and ships up to approximately 60,000 tonnes will be able to enter the port. By 2016, the depth at Tanjung Perak will increase to 16 metres and the capacity to ships of some 150,000 tonnes.

In regard to the railway, the construction of a double-track link between Surabaya to Jakarta will be finished by 2014. Additionally, rail links within the province, including Surabaya to Malang, Surabaya to Madiun, and Surabaya to Banyuwangi, will be finished in 2017.

The initial expansion for the airport will increase the frontage of the terminal and is expected to be complete by 2014, with passenger capacity increasing from 15m to17m passengers. The next development will be to build an additional runway adjacent to the existing runway. In terms of air connectivity, links are currently being developed to connect Banyuwangi to both Denpasar and Bawean island in northern Gresik, as well as connections to Bojonegoro and Kalianget on Madura island. Finally, the Abdurrahman Saleh airport in Malang will be developed to handle international air traffic.