The Role of Industrial Estate Management in Indonesian Economic Growth

By Yuni Ayuningsih | Published On: 27 May 2023
The Role of Industrial Estate Management in Indonesian Economic Growth

Industrial estate management is a key concept in the administration and development of industrial areas. Industrial estates are dedicated to production, manufacturing and related service activities in order to stimulate economic growth and employment creation. Industrial estate management involves planning, infrastructure development, operational supervision, and environmental management in order to establish a favorable environment for businesses in the area. Understanding industrial estate management principles and techniques is critical to achieving efficiency and success in industrial estate management.


What is an Industrial Estate?

According to the Government Regulation of the Republic of Indonesia No. 24 of 2009 on Industrial Estates, which is explained in Chapter 1 Article 1 (part 2), an industrial estate is an area where the concentration of industrial activities is equipped with supporting facilities and infrastructure developed and managed by an Industrial Estate Company that already has an Industrial Estate Business Permit.

Industrial estates must be effectively managed since efficient management provides a variety of significant benefits. Several management activities, such as planning processes, infrastructure development, operational monitoring, and environmental management, are required to establish a supportive environment for enterprises operating in industrial zones. As a result, it is critical to give special attention to industrial estates in order to foster industrial expansion.


Industrial Estate Management Definitions

Industrial estate management is a management concept that emphasizes on achieving efficiency, intended goals, and growth in an industrial area. This includes planning, infrastructure development, operational monitoring, environmental management, and stakeholder cooperation. This strategy approach strives to foster a favorable environment, boost competitiveness, and create jobs in industrial areas dedicated to industrial, manufacturing, and related service activities.


Industrial Estate Management Objectives

The primary goal of industrial estate management is to provide an environment suitable to industrial activities. Some of the specific goals include:

1.     Increase Operational Efficiency

Industrial estate management aims to improve production and operational efficiency of companies in the area through good management, strategic location selection, and supporting infrastructure development.


2.     Encouraging Economic Growth

By managing industrial estates well, the main objective is to promote economic growth through increased investment, job creation and the development of a stronger industrial sector.


3.     Facilitating Innovation and Technology

Industrial estate management aims to create an environment that encourages innovation and technological development within the area. This can be done through collaboration between companies, academic institutions, and the government.


4.     Maintain Environmental Sustainability

One of the important goals of industrial estate management is ensuring environmental sustainability by managing the industrial impact on the surrounding environment, including waste management, efficient use of resources, and ecosystem protection.


Industrial Estate Management Functions

Industrial estate management functions include several important activities aimed at managing and developing industrial estates effectively. The following is a brief description of these functions:

1.     Planning

The planning function involves preparing strategic plans for the development of industrial estates. This includes infrastructure planning, land allocation, supporting facilities, and regulation of economic activities within the area. Good planning helps create a clear and targeted framework for the growth of industrial estates.


2.     Organizing

The organizing function involves setting up the organizational structure, resource allocation, and assignment of tasks necessary to run the industrial estate effectively. This includes establishing management institutions, coordinating with companies operating within the area, and providing infrastructure and supporting facilities.


3.     Supervision

The supervisory function involves monitoring and evaluating operational activities in industrial areas. The aim is to ensure that companies within the region comply with established regulations, safety, quality and environmental standards. Effective oversight helps maintain integrity and compliance within industrial estates.


4.     Controlling

The control function involves measures to control activities in industrial areas. This includes financial control, production supervision, risk management, product quality monitoring, and resource management. Good controls help ensure operational efficiency, reliability and sustainability in industrial estates.


Example of Industrial Estate Management in Indonesia

Following are some examples of the application of industrial estate management in Indonesia:

1.     Jababeka Industrial Estate, Cikarang

The Jababeka Industrial Estate in Cikarang, West Java, is a successful example of implementing industrial estate management in Indonesia. This area offers modern infrastructure, good accessibility, and complete supporting facilities such as a logistics center and warehousing area. Jababeka also has policies that support investment and improve the quality of human resources in the region.


2.     Bukit Indah Industrial City, Batam

The Kota Bukit Indah Industrial Estate in Batam, Riau Archipelago, is an example of successful industrial estate management in Indonesia. This area is supported by adequate infrastructure, supporting facilities such as training centers and research centers, as well as incentive policies to encourage investment. Bukit Indah is becoming an attractive destination for manufacturing, logistics and other industrial companies in the region.


3.     Kendal Industrial Park, Central Java

The Kendal Industrial Estate in Central Java is an example of the application of industrial estate management that is currently developing in Indonesia. This area offers modern facilities, good connectivity, and various supporting services such as education and training. Kendal Industrial Park is also committed to sustainability and has adopted green technology and good environmental management.


4.     Medan Industrial Estate (KIM), North Sumatra

Medan Industrial Estate (KIM) in North Sumatra is an example of the application of industrial estate management that is developing in the region. KIM provides adequate infrastructure, logistical facilities, and policy support aimed at enhancing competitiveness and investment in the region. This area also encourages collaboration between companies and the development of quality human resources.

These instances demonstrate the efforts and achievements of industrial estate management in Indonesia. Industrial estates in Indonesia may contribute significantly to economic growth, job creation, and national industry competitiveness with strong infrastructure, supporting amenities, and the correct policy assistance.


The Important Role of Industrial Estate Management in Indonesia's Economic Growth

Industrial estate management is critical to Indonesia's economic progress. Here are some of the reasons why industrial estate management is critical:

1.     Promote Investment and Job Creation

Industrial estates that are well-managed generate an appealing environment for investment. Companies are encouraged to operate in the region because of the region's complete infrastructure, supportive facilities, and favorable legislation. This helps to create jobs and raises people's income.


2.     Improving Productivity and Competitivity

Industrial estates can establish an atmosphere that promotes high productivity and greater firm competitiveness through good management. Adequate infrastructure, easy access, and supporting facilities such as skill training assist businesses in improving operational efficiency and product or service quality.


3.     Creating a Stable Industrial Ecosystem

Industrial estate management aids in the development of a robust industrial ecosystem. When different sorts of businesses operate in the same location, there is an interchange of knowledge, collaboration, and innovation. This creates synergies and boosts the industry's overall growth.


4.     Increasing Economic Diversification and Connectivity

Integrated industrial estates with strong transportation infrastructure make it easier to connect businesses, markets, and resources. Furthermore, industrial estate management promotes economic diversity by supporting the presence of multiple industrial sectors at a same location.


It may be inferred that industrial area management is critical in optimizing a region's industrial potential. With proper administration, industrial estates may foster investment, encourage economic growth, and create jobs. Industrial estate management may become the primary driver of growth in the industrial sector and the economy as a whole by providing enough infrastructure, supporting facilities, and supportive policies. Industrial estate management may greatly contribute to sustainable and inclusive economic growth with government assistance, stakeholder participation, and excellent planning.

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