- Twenty-seven Chinese and Vietnamese manufacturers plan relocation to Java due to U.S. tariff gaps.
- Shift could generate 120,000 jobs but demands faster licensing and skilled workforce.
- Central Java attracts factories with lower wages, efficiency gains, and rising global competition.
The National Economic Council (DEN) has disclosed that 27 labor-intensive manufacturing firms from China and Vietnam ‒ primarily in clothing and footwear ‒ are ready to relocate production to Java, largely influenced by the import tariff differences established by U.S. President Donald Trump on various key trading partners.
DEN member Mochammad Firman Hidayat stated that the change in policy has positioned Indonesia as a more competitive hub for production. Should the relocations occur, they may create approximately 120,000 additional jobs in the nation.
To demonstrate the competitive disparity, the U.S. presently imposes reciprocal tariffs of approximately 19 percent on Indonesian products, in contrast to 47 percent for China and 20 percent for Vietnam. This benefit is encouraging investors to view Java ‒ especially Central Java ‒ as an appealing location.
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Nonetheless, Firman emphasized the need for quicker licensing processes and administrative reforms to enhance business operations. Investors are urging for improved preparedness of the local workforce. He pointed out that businesses will need many sewing workers, whereas most residents of Central Java have historically been employed in agriculture.
The Indonesian Employers Association (Apindo) has been monitoring a pattern of footwear and garment factories relocating from Banten and West Java to Central Java. Adhi Lukman, Head of the Manufacturing Industry Division at Apindo, stated that this change is driven by cost structure, efficiency, and increased global competition.
He noted that Central Java maintains lower wage levels compared to conventional industrial centers, prompting firms to shift some or all of their activities to stay competitive.