Jakarta. A number of Chinese investors are eyeing to relocate their factories to the Kendal Special Economic Zone (SEZ) in Central Java, according to Deputy Industry Minister Faisol Riza.

Early this month, US President Donald Trump imposed a 10 percent additional tariff on imports from China. Trump is now planning to hit Chinese goods with a new 10 percent tariff. The factory relocation plans came as Chinese companies attempted to maintain access to the US market while avoiding those high tariffs. Faisol recently confirmed these plans, citing that Central Java was quite popular among Chinese investors.

"Yes. These [Chinese companies] are already exploring relocation plans in several industrial estates. They have mentioned industrial parks in Central Java," Faisol said in Jakarta on Thursday, as reported by the state-run news agency Antara.

As of end-2024, Kendal SEZ is home to 42 companies that have all invested up to Rp 86 trillion (almost $5.2 billion). The industrial park has also prepared an additional 1,200 hectares of land for the second phase of development. The first phase spans 1,000 hectares and has already reached 90 percent occupancy. The Kendal SEZ is allocating the remaining 10 percent of land to facilities such as residential and commercial units.

China is Indonesia's third-largest source of foreign direct investment (FDI). Indonesia recorded $8.1 billion in FDI inflow from China throughout 2024, just behind Hong Kong at $8.2 billion. There are some Chinese companies currently operating in Kendal SEZ. This includes Chinese anode battery material giant BTR which launched its manufacturing plant in Kendal last year.

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