Kadin: Infrastructure development critical for KIA Ladong's viability

The lack of supporting facilities and infrastructure has made the Aceh Industrial Zone (KIA) Ladong unattractive to investors. Therefore, the Aceh Provincial Government has been urged by the private sector to be more serious about developing basic infrastructure to make the area a truly viable investment destination.

Indonesian Chamber of Commerce and Industry (Kadin) Aceh Chair Muhammad Iqbal stated that several investors who had visited KIA Ladong complained about limited facilities, particularly for logistics and sea transportation. The area's shipping access is considered inadequate, with ships entering the Port of Malahayati only about once a month.

"This situation certainly makes it difficult for investors. The question is, how will the logistics distribution be if the industry enters KIA Ladong? Could the Port of Malahayati truly support it? In fact, the number of ships entering is very minimal," Iqbal said when asked after a focus group discussion (FGD) at Moorden Coffee on Feb. 5, 2025.

Nevertheless, Iqbal noted that investor interest in Aceh is currently growing. Several Chinese companies are reportedly interested in investing in KIA Ladong, including for the construction of an electronic cigarette (e-cigarette) factory.

"In addition to targeting the local and national markets, these investors are also aiming for exports to the Middle East, Europe, and South Asia," he revealed.

Iqbal added that Aceh is considered geographically strategic because it is closer to these international markets than other industrial areas in Indonesia. In addition, there are also plans to invest in a milk factory.

However, the challenges of limited basic infrastructure, such as electricity, clean water, and other industrial support facilities, remain. This situation is making investors reconsider their plans.

"How can investment come in if the government is not fully prepared? If investment proceeds, the multiplier effect is enormous, ranging from job creation, technology transfer, to regional economic growth," Iqbal noted.

He compared KIA Ladong to developed industrial areas such as those in Cikarang, West Java Province, and the Medan Industrial Area (KIM) in North Sumatra Province. The managers of those industrial areas both provide land and complete supporting infrastructure, including warehouses that investors can rent or purchase. Therefore, the Aceh Provincial Government is being asked to prioritize KIA Ladong in its 2026 regional budget, with the implementation including the provision of vacant land and basic facilities in the industrial area so investors only need to bring production machinery and equipment.

"Especially storage warehouses. Because this is crucial for investors to store their goods," Iqbal stressed.

Other options are also recommended should Aceh's actions are constrained by a limited budget, including cooperation with the private sector or land acquisition through the Right to Build (HGB) scheme.

"This is to prevent KIA Ladong from just being a potential, unproductive area," Iqbal concluded.