Children's toys manufacturers in Indonesia are increasingly looking at Central Java - specifically Kendal - for business expansion or full relocation as land prices and minimum wages are more competitive in this province. Sutjiadi Lukas, Chairman of the Indonesian Toy Association (AMI), said one kids toys manufacture - Sinar Harapan Plastik - has already bought a 2-hectares plot of land in Kendal.
Sinar Harapan Plastik currently has its factory in Kapuk (North Jakarta). However, recently-made local regulations do not allow factories outside industrial zones anymore and therefore the factory needs to exit Kapuk.
Lukas added that other companies are also interested to expand their business in Kendal, attracted by low regional minimum wages and low land prices (compared to the Greater Jakarta region). Land prices in Kendal average IDR 1.6 million per square meter (m2), while in the industrial zones of the Greater Jakarta region the price ranges between IDR 2 million and IDR 5 million per m2. Meanwhile, the minimum wage in Tangerang (part of the Greater Jakarta region) is about IDR 3 million per month, while in Kendal the minimum wage is only IDR 1.7 million (approx. USD $126) per month.
Currently, most domestic children's toys producers are located around Jakarta, particularly in Tangerang, Bandung and Bekasi.
The Indonesian Toy Association will actively encourage the arrival of domestic children's toys factories in Kendal. Therefore, it already teamed up with local industrial estate operator Kawasan Industri Kendal. This cooperation should result in the establishment of a 10-hectares business cluster devoted to children's toys in this industrial zone (Kawasan Industri Kendal is a joint venture between Graha Buana Cikarang - unit of Indonesian industrial land developer Jababeka - and Sembcorp Development Indonesia Pte. Ltd. - unit of Singapore-based Sembawang Development Ltd).
Other advantages of Kendal include that local authorities (and Kawasan Industri Kendal) are eager to assist with the permitting process to increase the ease of doing business. Meanwhile, there is good access to the Tanjung Emas port in Semarang, while Kawasan Industri Kendal is also planning to construct its own port.
According to Lukas there are plenty of opportunities in the children's toys sector of Indonesia as 4.5 million new children are born every year (and although toys are no basic needs, they are important), while currently most toys in Indonesia are actually imported (about 60-65 percent of kids toys on the Indonesian market are imported). Based on data from Indonesia's Statistics Agency, USD $182.8 million worth of children's toys were imported into Indonesia in the January-August 2017 period, up from USD $124.2 million in the same period one year earlier.
But, interestingly enough, Indonesia exported USD $197.0 million in the January-August 2017 period, up from USD $181.4 million in the same period one year earlier. Therefore, there are also opportunities in terms of export.