hectares of land to relocate their plants to Indonesia, at a cost of nearly US$580 million in the second quarter of 2011. “We invite them to come here, we’d
love for them to come!” Sudrajat said emphatically. “Te important thing is they can employ more Indonesian work- ers.” Other Chinese textile makers will likely follow, he added, if the Indonesian government can ensure the proper infra- structure will be in place to keep them from preferring other Southeast Asian nations, such as Vietnam – where 90 Chinese factories relocated last year. Vietnam’s advantage over Indone-
sia stems in part from the relatively su- perior planning and management of its industrial zones, which have an assured supply of electricity and water, as well as adequate access to roads, telephone lines and sewer systems. Sudrajat said Chinese companies usually want to cluster all of their plants in such zones. “Chinese clothing factories began
moving to where they believe the invest- ment climate is good, policy is encourag- ing, labor costs are cheap, and to where they believe they can make money,” said Zhao Hong, deputy director of the Inter-
FRIEND OR FOE? Indonesian anti- Chinese sentiment worries firms
national Trade Office at the China Na- tional Textile and Apparel Council. “As businessmen, they naturally think so. Al- ways keep it in mind that capital is greedy in nature, it flows into where a good re- turn is expected and achieved.”
Bad memories
Te Indonesian government is trying to become even more competitive by offer- ing financial incentives to bring in inves- tors, such as exempting import duties
on machinery and raw materials for two years. But even if the regulatory environ- ment is sweetened, it may not be enough to attract some Chinese firms. One major impediment is more
social than business-related: Chinese investors are still worried about per- ceived anti-Chinese sentiment in In- donesia. Zhao said many Chinese still remember the murderous anti-Chinese riots that broke out in Indonesia in May 1998 in the wake of the collapse of the
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China Economic Review • May 2011 41
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