Basically, the development for industrial area is required to support the economy in a country. If one country has well maintained industrial areas, it can be the supporting factor for the investor to make their investment in those areas.

It is stated in Article 1 of Government Regulation Number 24 of 2009 concerning Industrial Area (“Industrial Area Regulation”), industrial area means the center of industrial activities which is already completed with the facilities and infrastructures which will be managed by the industrial area license holder or industrial company (“Company”).

The purposes of the development of industrial area are to:

  1. control the space utilization;
  2. improve the development of environmental friendly industrial area;
  3. expedite the local growth of industrial area;
  4. improve the industry competitiveness;

The Development of Industrial Area

To develop the industrial area, there are some important things that must be considered as follows:

  • The development must be in accordance with the national zoning plan (rencana tata ruang wilayah nasional).
  • If the Company wants to expand the industrial area, the area must be located in the industrial area and the Company has to obtain the Expansion Permit for Industrial Area (Izin Perluasan Kawasan Industri).
  • Aside to the industrial activities, it is also allowed for the Company to conduct the storage function within those areas. To conduct the storage activities, the Company has to obtain the Industrial Business License (Izin Usaha Industri) or Industrial Register (Tanda Daftar Industri).

Specification for Industrial Area

According to Article 10, it is stated that the minimum land area for industrial area is 50 (fifty) hectare for one location. Moreover, this Industrial Area Regulation has stipulated the different specification for micro, small and medium industries on this matter, it is stipulated that the minimum land area for industrial area is 5 (five) hectare for one location.

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Industrial Area License (Izin Usaha Kawasan Industri)

It is regulated that the Company has to obtain the Principle License first before obtaining the Industrial Area License. Within 2 (two) years after the Company has obtained the Principle License, the Company shall conduct:

  1. land occupancy (penguasaan tanah);
  2. plan of land utilization (penyusunan rencana tapak tanah);
  3. land development (pematangan tanah);
  4. environmental quality threshold (AMDAL – Analisis Mengenai Dampak Lingkungan) and its ratification;
  5. planning and development of the facilities and infrastructures including the installation and or the required equipments;
  6. preparation of industrial area rules;
  7. marketing of industrial land; and
  8. provision, operation and/or management for the Company in the industrial area.

The preparation for the industrial area can be extended for 2 (two) years, thus the Company has 4 (four) years to prepare the industrial area. Moreover, the Company which already obtained the Principle License has to obtain the Location Permit (Izin Lokasi) from the Regent, Governor, and/or Head of National Land Agency depending on the location of industrial area.

It is allowed for the Company which already obtained the Industrial Area License to assign the management of industrial area to the other parties. The assignment from the Company to the other parties must be notified to the agency who issued the license to the Company.

Moreover, if the Company has already obtained the Industrial Area License, the Company may obtain the Right to Build for the area. The Right to Build can be divided into some lots within that area.

Obligations of the Company

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According to Industrial Area Regulation, the Company must have:

  1. environmental management efforts (upaya pengelolaan lingkungan); and
  2. environmental controling efforts (upaya pemantauan lingkungan).

Those obligations are required to make environmental-friendly industrial area according to the purpose of the development of industrial area.

Sanctions

The sanctions in the event there is violation towards the Industrial Area Regulation, the Company can be imposed with administrative sanctions in the forms of:

  1. written warning;
  2. Industrial Business License and/or Industrial Register suspension;
  3. Industrial Area License suspension;
  4. Industrial Business License and/or Industrial Register revocation; and/or
  5. Industrial Area License revocation.

Jerry Shalmont, SH