Waiting for Good Luck from the Industrial Estates
How has the performance of industrial areas been so far? Have they met the principles of sustainability and being environmentally sound?
President Joko Widodo along with a number of ministers and Central Java Governor Ganjar Pranowo inspected the Batang Integrated Industrial Estate land in Ketanggan Village, Grising District, Batang Regency, Central Java, Tuesday (30/6/2020).
During his recent visit to Central Java, President Joko “Jokowi” Widodo took the opportunity to have a look at the location of an industrial area in Batang regency that was expected to accommodate the relocation of seven industrial firms from China and hundreds of foreign companies from a number of other countries.
The president was deeply disappointed that the 33 industrial firms that left China some time ago preferred Vietnam as a place for relocation and none of them looked at Indonesia. Batang Industrial Estate is one of 27 industrial areas that will be developed by the government until 2024.
According to President Jokowi, the presence of industry is very important in creating employment and economic growth. How has the performance of industrial areas been so far? Have they met the principles of sustainability and being environmentally sound?
Growth and employment
That industrial estates are centers of growth was first conceptualized by French economist Francois Perroux. A growth center, with industry as a trigger, is expected to provide benefits not only to the area around the growth center, but also to its hinterland, known as the trickle-down effect in the form of growing employment opportunities and opportunities for businesses and suppliers of raw materials.
Industry-based growth centers have proven to be able to contribute to economic growth.
In 1992, Time magazine noted that the contribution of the industrial sector to gross domestic product (GDP) in Indonesia reached 25 percent and therefore our country at that time was classified as a new tiger of Asia. Industry Ministry records show that 20 percent of the workforce is absorbed in the industrial sector. Downward droplets (the hinterland) are seen mainly in the growth of employment opportunities.
Also read : Coronavirus and National Industry
In the 1990s we witnessed thousands of bicycle commuters from Sayung, Demak, to a growth center in Genuk, Semarang city, the location of industrial zones. Hundreds of commuters also flowed from Kaliyoso to Solo and from Wates to Yogyakarta. The same phenomenon also occurred in the industrial areas of Rungkut (Surabaya), and Sidoarjo (East Java), Pulogadung (Jakarta), and other regions. For the areas around the industry, in addition to employment opportunities, business opportunities were also growing as could be seen from the mushrooming of the informal sector such as food stalls, shops, workshops, tire-patching businesses, boarding houses and clean water services.
/https%3A%2F%2Fkompas.id%2Fwp-content%2Fuploads%2F2020%2F04%2F0f713143-f7c7-43bd-9747-7649ce1aa8ef_jpg.jpg){kind=logo}
Ojek (motorcycle taxi) drivers await passengers and delivery orders along Jl. Prof dr Satrio, Casablanca, South Jakarta, on April 13. Ojek drivers have been some of the worst-hit informal sector workers, as they have seen a sharp decrease in the number of customers.
Footloose
However, its role as a supplier of raw materials has not run as expected. The relationship between the upstream and the downstream (backward-forward linkage) is rather minimal because the types of industries that are built at the center of growth are generally not related to raw materials available in the surrounding areas, such as fisheries, agriculture, plantations and livestock.
Such industries are referred to as being footloose or having no basis with the local economy. This phenomenon is often criticized by the late Prof. Mubyarto, a populist economic figure who said the presence of industry did not provide significant local additional value because it was not based on the local economy. The surrounding areas, which are based on agriculture, fisheries, and livestock, can be described in the proverb, Sudah jatuh tertimpa tangga (Falling and struck down by a ladder). On the one hand, resources in the form of labor and capital are sucked into the center of growth and on the other hand they continue to be pressured by industrial activity through land use conversion and environmental impacts.
Also read : Indonesia to Mitigate Covid-19 Outbreak’s Economic Effects
A number of industrial firms that will enter the Batang Industrial Estate apparently will be ready-made industrial firms that will be wholly relocated from their home countries. Factors that encourage them to leave can be expensive taxes, increasingly stringent environmental regulations and the saturation of the location of the industrial firms itself.
The pull factor is likely to get closer to the market. The need to get closer to the market is also the reason why ice cream producers from Singapore will build factories in the Sidoarjo Industrial Estate (East Java) and North Sumatra. Such forms of industrial relocation require minimal transformation with local potential, both in terms of meeting the needs of raw materials and skilled labor and technology transfer.
According to the records of the Research, Technology and Higher Education Ministry (2018), 58 percent of industries in Indonesia choose to take over the technological innovation from the countries of origin.
Also read : The Opportunity to Establish Innovation Independence
Simple and Low Cost Prototype Mechanical Ventilator made by the Sepuluh November Technology Institute at the ITS Robotics Building, Surabaya, East Java, Tuesday (7/4/2020).
Environmental burden
For the surrounding areas, industrial activities cause environmental impacts in the form of water and air pollution, traffic jams and noise pollution. It is undeniable that some of the quality parameters in almost all of the rivers used to dump industrial waste have been exceeded. This is indicated in the case of the Bengawan Solo (River) pollution in Sukoharjo, Solo and Blora, which once stopped the operation of local clean water company PDAM.
According to data from the Center for Industrial Pollution Prevention Technology at the Industry Ministry (2019), the contribution of pollution from the textile industry in the Bengawan Solo watershed areas reached 30 percent. This pollution load did not include other types of industries that also utilized Bengawan Solo as a waste dump site.
The Citarum Harum Program is an indication of the burden of washing dishes from pollution having originated from the industry. As reported in the mass media, officers had been forced to close the sewage disposal from several industries along the Citarum River. Air pollution in the form of smoke fumes is a common sight we see in industrial areas. Moreover, all industrial areas are synonymous with congestion and pollution. Conversion of land functions from ponds and rice fields to industry brings with it the overflow of water, which accumulates into flooding.
Also read : Environmental Issues Need Attention
In the area around the industrial zones at the border between Solo and Karanganyar, according to records from the Central Java Health Office, there appear various diseases that were suspected to be triggered by heavy metal content through agricultural products, such as rice and corn. Managing the environment in industrial estates is to some extent complicated.
Industries that inhabit industrial estates have easy access through the absence of requirements to make an environmental feasibility study, either in the form of an analysis of environmental impacts (Amdal) or environmental management efforts and environmental monitoring efforts (UKL/UPL).
The difference in color of blackened river water from the Cicukang oxbow flows into the Citarum river in Margaasih District, Bandung Regency, West Java, Wednesday (12/5/2018). In 2019, the central government budgeted up to Rp 640 billion for the improvement of the Citarum River.
This environmental feasibility study is the responsibility of the industrial zone authority, while the industrial occupants conduct environmental management and monitoring over their respective activities. The problem is that an environmental study is prepared when prospective occupants (industrial firms) have not yet entered so that the description of activities cannot be clearly defined.
When environmental permits are issued based on environmental studies (Amdal or UKL/UPL), the industries that enter vary depending on demand. Almost all industrial zones are very market driven, accepting any industry that wants to enter with various conveniences. For example, there was an industrial zone in a city that was originally allocated for warehousing, yet in practice it accepted a variety of manufacturing industries. As a result, the environmental management plan that was compiled did not match.
Opportunity to improve
President Jokowi\'s passion to make industry an engine of growth should be an opportunity to improve the industrial zones. The upstream and downstream linkage must be designed from an early age and really implemented so that local added value is not only in the form of labor. This linkage also guarantees that it will not displace the agriculture, fisheries, animal husbandry and plantation sectors, which are the basis of the livelihoods of most of our people.
These sectors should synergize in the form of upstream-downstream relations. Industries that become the growth engines must apply the principle of clean production that manages the environment from the selection of raw materials, production processes, finished materials, up to distribution. Economic growth at the expense of the environment will require expensive recovery costs. In around 1993, our economic growth accelerated to 7 percent. However, when calculated with environmental damage and depletion of natural resources, according to the World Resources Institute (WRI) the real growth rate was only 5 percent.
Sudharto P Hadi
We are waiting for the emergence of industrial estates that are able to synergize growth, environmental sustainability and a sense of justice.
Sudharto P Hadi, Lecturer of Environment Management of Diponegoro University.
