Solidiance has produced this white paper for information purposes only. While every effort has been made to ensure the accuracy of the information and data contained herein, Solidiance bears no responsibility for any possible errors and omissions. All information, views, and advice are given in good faith but without any legal responsibility; the information contained should not be regarded as a substitute for legal and/or commercial advice. Copyright restrictions (including those of third parties) are to be observed. INDONESIA’S GREEN INDUSTRIAL ESTATES & BEST PRACTICES NOVEMBER 2015 solidiance
Transcript
Solidiance has produced this white paper for information purposes only. While every effort has been made to ensure the accuracy of the information and data contained herein, Solidiance bears no responsibility for any possible errors and omissions. All information, views, and advice are given in good faith but without any legal responsibility; the information contained should not be regarded as a substitute for legal and/or commercial advice. Copyright restrictions (including those of third parties) are to be observed.
IndonesIa’sG r e e n I n d u s t r I a l e s t a t e s & B e s t P r a c t I c e s
NOVEMBER 2015
solidiance
www.solidiance .com2
4
9
22
23
24
25
INdONEsIa: cuRRENt INdustRIal EstatE, tRENds, & ENVIRONMENtal BackgROuNd
INdONEsIa’s gREEN appROach (pROpER) aNd INtERNatIONal BEst pRactIcEs
cONclusION
INFOgRaphIc
authORs
aBOut us
ConTenTExEcutIVE suMMaRy
3
aNalysIs : INdONEsIa’s 5 BEst gREEN INdustRIal EstatEs
14
3www.solidiance .com
exeCuTIve summary
Indonesia’s economic growth in industrial estates has seen a positive trend
in the last five years despite the economic turmoil that happened in recent
times. However, concerns focused on environmental and social impacts
are seen as the consequences of the new land openings for the estates,
which urges industrial players to implement the principles of sustainable
business as an indicator of business success as well as positioning social
and environmental variables for realizing sustainable business practices.
In this white paper entitled “Indonesia’s Green Industrial Estates & Best
Practices”, Solidiance addresses an idea to bridge the above issue which
still enables estates to keep growing economically without sacrificing
environmental and social aspects. This idea is expressed through
examples of green initiatives within industrial estates in Indonesia
which came up as a result from the analysis of Indonesia’s regulations
for environment along with international best practices of sustainable
industrial estates.
Solidiance first mapped all existing 233 industrial estates in Indonesia
and further developed categories of assessment based on benchmarks
in Asian and European countries which resulted in an approach that
highlights and synchronizes the major functions of ‘3 sustainable pillars’ of
industrial estates, consisting of economic
growth, environment and social aspects.
To localise the scope, Solidiance used data
from Indonesia’s green approach, KLH
(PROPER), which narrowed the estates
into 30+ shortlists. From the 30 shortlisted
industries, Solidiance conducted more
in-depth research to explore various
initiatives on those three pillars.
The analysis finished with the 10 best
estate initiatives. After conducting further
research (interviews, desktop, media
tracking and monitoring) on the 10
estates, Solidiance was able to narrow
down Indonesia’s Best 5 Industrial Estates
which have implemented excellent green
initiatives and have successfully integrated
the three pillars within their operations -
which are highlighted in this white paper.
These initiatives are expected to give fresh
insight and guidance for existing and new
industrial players in shifting their business
approach into a sustainable system.
www.solidiance .com4
IndonesIa: Current Industrial Estate, Trends, & Environmental
Background
5www.solidiance .com
During the recent decade, Indonesia’s economic growth has shown a positive
trend that has strengthened the country’s position as a primary investment
destination in Asia. A combination of solid macroeconomic regulation and
consistent increase of domestic consumption has flourished the country with
sufficient capital to become a strategic hub over Asia Pacific. Amidst economic
turmoil that happened in early 2015, such as drop of global market demand,
decrease in commodity price, and deceleration of global investment, Indonesia‘s
outlook towards macroeconomics remain positive.
Along with its economic growth, the real
estate sector has gained a more positive
promise. This promising state of affairs
has made market players not only put
Indonesia solely as a consumer country,
but also as a strategic manufacturing
point. Multinational reputable companies
have gradually moved its regional
manufacturing hub to Indonesia. This
is reflected in the growing demand for
industrial estates land in various places in
the country.
As the demand for industrial estates increases, supply
side will remain tight as a lot of developers are still
preparing their land back for marketing purposes.
With tight take-up rates, the price of industrial estate
land is expected to rise at approximately 10% per
annum in the coming years. There are more than
60 major industrial estates that exist in Indonesia
today with land size of 27,000 ha. West Java has the
highest number of industrial estates, accounting for
60% of all industrial land while the remaining 40% is
scattered around Indonesia.
Indonesia’s stable growth during recent decade
27.6
28.3
30.4
59.5
78.9
2011
2012
2013
2014
2015e
gROWth OF INdustRIal EstatEs IN INdONEsIa (1,000 ha)
NuMBER OF INdustRIal aREa acROss INdONEsIa (2011-2015)
Source: BKPM, Indonesia Ministry of Industry, Solidiance analysis
Source: BKPM, Indonesia Ministry of Industry, Solidiance analysis
Growth of industrial estates may have a positive impact to the national economy, however, concerns from pressure groups
have lately emerged concerning environmental and social impacts for new land openings. Land clearing is feared to change
the natural structure of the ecosystem, while environmental impacts increases the concern during which an industrial
area begins its operations such as downgrading the quality of air, water and other pollutant material from the waste of
manufacturing processes.
Issues resulting from environmental damage have indirectly encouraged activists to urge industrial players to implement the
principles of sustainable business, which is not solely placing the economic outcome as the indicator of business success but
also positioning social and environmental variables for realizing sustainable business practices. The figure below illustrates
the need to bring about change for industries in order to create a better integrated sustainable system without giving more
damage to the environment.
This is due to strong increase
of car demands in emerging
countries
glOBal cO2 EMIssION FROM FOssIl FuEl cOMBustION By typE OF
sEctOR, 2014
tOtal glOBal ENERgy cONsuMptION FROM thE
INdustRIal sEctOR
environmental background
Source: epa.gov/climatechange
Source: Annual Energy Outlook 2015 Report, EIA
202224262830
2010 2020 2030 2040
Qua
drill
ion
Btu
Industrial
www.solidiance .com8
To fill the gap between industrial estate
growth and the bigger environmental
problem, industrial players are required
to take action initiatively in rethinking
and adjusting their business process to
be more ecological and socially friendly.
These communities of manufacturer
and service businesses must aim to
demonstrate progress towards the goal
of sustainable development through
reducing impacts on the environment or
achieving a more efficient and responsible
use of natural resources, including energy.
Some ASEAN countries have created
green initiative projects to maximize
the industrial player’s progression
towards a greener and more sustainable
industrial estate through a wide range of
policy types, including Indonesia. Social
advancement, environmental protection,
and economic development become the
key drivers leading towards industrial
green initiatives. However, lack of
competent resources with no universal
guidance to implement sustainability
pose as a challenge – depicted here in
Solidiance’s framework.
Green Initiatives : the genesis and growing trend
tRENds & dEMaNd OF sustaINaBlE BusINEss
pRactIcEs
sOcIal adVaNcEMENt
EcONOMIc dEVElOpMENt
ENVIRONMENtal pROtEctION
cuRRENt statE:
• Improving communities’ health and education
• Increasing income and quality of life for the local community
• Engage with key stakeholders and the local community
• More innovation to maximize growth potential
• Increase business’ resilience• Obtain “social license” to
operate
• Efficiency in resources• Reduction in pollution and
industrial gas emissions• Waste management and
minimizing health risks
• Lack of competent education, workforce, and funding
• No universal guidance
• Significant exposure over social investment towards environmental and social related activities
• Increased awareness to conserve the environment
Source: Solidiance analysis
INdustRIal gREEN INItIatIVEs
9www.solidiance .com
IndonesIa’s Green Approach (PROPER) and
International Best Practices
www.solidiance .com10
An eco-friendly Industrial estate is defined
as the community of manufacturing
and service businesses seeking
enhanced environmental and economic
performance through collaboration in
managing environmental and resource
issues including energy, water, materials,
infrastructure and natural habitats.
PROPER is an Indonesian government
program which is constituted in the
Indonesian Minister of Environmental
Decree No. 127 year 2012 to encourage
private sectors to be more transparent in
publishing its information on environment
management.
pROpER’s kEy aspEct
pROpER’s OBJEctIVEs
pROpER gRadINg
• Water&SeaWaterPollutionManagement
• AirPollutionManagement
• Solid&HazardousToxicWasteManagement
• GovernmentAMDALCompliance
• GovernmentRegulationCompliance
• GreenProduction
• GoodEnvironmentalGovernanceImplementation
Indonesia’s solution : ProPerThe Indonesian ‘green certification’ approach
Green Initiatives Low High
Com
plia
nce
Low
H
igh
Source: Ministry of Forestry and Environment Republic of Indonesia, Solidiance analysis
11www.solidiance .com
ProPer : current status & achievements
EFFEctIVENEss
INdustRIal REactION
MatERIalIty
INdustRIal cOVERagE
• Deemed effective as industrial control tools in managing its environmental impacts
• Responded positively by private companies. Participation index had increased from 49% (2004) to 74% (2014).
• Its criteria have been replicated by 12 countries among others: China, Philippines, Mexico and Ghana
• Covers wide-ranged industrial sectors: Mining, Oil and Gas, Agro-Industries, Manufacturing, and Service. Proper 2015 is participated by more than 2,100 companies
ENERgy cut
WatER cONsERVatION
WastE REductION
sOcIal ENgagEMENt actIVItIEs FuNd
• 26 MillionGigajoule
• 488 Million M³
• 11 million tonsnon-hazardoussolid
• 2.4 million tonshazardous-toxic
• IdR 1.16 trillion
Based on 1,908 participatory companies,
PROPER has claimed to generate a
number of impact as follows:
Among 1,908 participatory companies: • 9companies are awarded the
golden category• 121companies are awarded the
green category • 1,224companies are awarded the
blue category• 516companies are awarded the red
category• 21companies are awarded the
black category
www.solidiance .com12
This Industrial Estate was opened back in
1959, located in Kalundborg, Denmark.
Kalundborg’s green practice offers a
beneficial relationship between companies
which turns their respective industrial bi-
product into valuable resources for other
partner companies, resulting in both
economic and environmental benefits.
Initially, the symbiosis started with a few
key partnerships and gradually grew into
an ecosystem over time.
“The Industrial symbiosis concept and system is simple. a company’s by-product becomes a valuable resource to one or many of the other companies in the co-located Industrial symbiosis network. This network of recycling and reusing have generated new revenue and cost saving for the partner companies and reduced pollution to air, waste and land in the area.”- Robert Suarez, Biomimicry Case Study
International best practices : Kalundborg, Denmark
kalundborg system
key Motivation to Reduce cost
by Waste product application
companies symbiotic
relationship within
Ecosystem
Reduction in production,
Material, Water, and Energy
Improved health of local people
& Operating Efficiency
Natural & Financial
Resources conservation
3 core Elements
(Water, Energy, Material)
symbiotic Management
system
Enterprises Major green practices
Novo Nordisk, Novozymes, Gyproc, Kalundborg Municipality, Dong Energy, RGS 90, Statoil, Kara/ Novoren, and Kalundborg Forsyning A/S
• Energy efficiency by using thermal heat from other companies
• Water saving by treating and using waste water into usable ‘new’ water source
• Material by-product exchange between companies
FRaMEWORk OF kaluNdBORg INdustRIal
EstatE
pROFIlE OF kaluNdBORg INdustRIal EstatE
Source: Biomimicry Case Study, Solidiance analysis
13www.solidiance .com
Kawasaki Zero Emission Industrial Estate is
one of the early green estate initiatives in
Japan, in which they aim to revitalize its city
by facilitating companies with resources such
as recycling production as well as installment
of resource recycling equipments. The area
was opened back in 2002, located in Mizue-
Town, Kawasaki Ward, with total land area of
77,464 m2 ha.
“Capitalizing on our past experience with pollution and cutting-edge environmental initiatives to date, we plan to widely disseminate information on superior environmental technology and products within Japan and overseas. We will transfer environmental technology as a global contribution and a form of industrial exchange.”- Japanese ministry of environment
International best practices : Kawasaki Zero Emission Industrial Park, Japan
kawasaki Industrial
town
kawasaki New Era plan
2010
creation of Recycling-Oriented society
companies inside site
collaborate to go Eco-Friendly
R&d of coastal area on
Environment
kawasaki Eco-town
contribution for International
communication and sending performance
kawasaki Eco-town
plan
Needs for structural changes +
Environment Issue
Enterprises Major green practices
15 companies focusing on Metal Fabrication, Paper, Surface Planting, and other sectors with 400 working people
• Use of natural gas cars• Use of hydro-generation
plants• Circulating use of
chemicals & water• Recycling of used mixed
papers• Plastic waste recycling
and reuse for other companies
• Introduction of high efficiency, energy savings ventilation systems for commercial facilities
• Resource recycling, Low CO2 steel operations
• Energy cycle & effective energy use initiatives
FRaMEWORk OF kaWasakI INdustRIal
EstatE
pROFIlE OF kaWasakI INdustRIal EstatE
Source: Publication of Japanese ministry of environment, Solidiance analysis
www.solidiance .com14
analysIs :Indonesia’s 5 Best Green
Industrial Estates
15www.solidiance .com
solidiance’s analysis & approach
After analyzing the former best practices
available for green industrial estates,
Solidiance gained a better perspective
as to how an industrial estate could
transform their existing system into
becoming more sustainable.
While former practices are seen to
focus on mostly two aspects (economic
& environment), it is driven by the fact
that these practices were established
in developed countries, where the
social aspect has been taken care of.
Thus, they have, indirectly, covered all
three aspects simultaneously – social,
economic and environmental aspects.
Enterprises Indicator Focus
Best International Practices
Social(Customer Relationship Program)
Economic (Tenant & Local Economic
Development)
Environment(Waste & Resource Management,
Energy Efficiency, Recycling)
Kalundborg
Kawasaki
www.solidiance .com16
In addition to the above analysis, Solidiance believes that industrial estates need
to have a maximized integrated 3 pillars system to be implemented on becoming
sustainable. The 3 pillars are Environment, Economic and Social. Environment
acts as the core foundation of industrial estate where its condition must be at
the top of every estate management attention list. Every action that will be taken
must not put the environment in a worse condition than when the action was not
taken. The Social pillar is the second pillar, which acts as the main support for the
estate’s operation. Having a cooperative relationship with the local community
will help the estate operate efficiently without having to deal with social issues
that might arise due to bad social relationship programs. Industrial estate must
understand that it is important for them to manage both environment and social
aspects in order for them to support their economic development, since focusing
only on one key aspect will mainly generate cost for them.
After screening all existing 233 industrial estates in Indonesia,
Solidiance used the framework above as a basis to highlight
Indonesia’s best 5 green industrial estates – which have
integrated all three pillars consisting of social, economic and
environmental aspects on their industrial green initiatives.
The following list is sorted in an alphabetical order.
thE 3 pIllaR appROach Is dEpIctEd IN a FRaMEWORk cONstRuctEd By sOlIdIaNcE:
RIsE OF pRIVatE
INdustRIal EstatE
NON-INtEgRatEd INItIatIVEs INtEgRatEd INItIatIVEs
ENVIRONMENtal MaNagEMENt
INItIatIVEs
EcONOMIc dEVElOpMENt
sOcIal adVaNcEMENtthE RIsINg tRENds & dEMaNd
OF sustaINaBlE BusINEss pRactIcEs
sustaINaBlE INdustRIal EstatE
17www.solidiance .com
As the first private industrial park with foreign investment from Japan, EJIP has been demonstrating leading activities and a
role model of industrial park in Bekasi area, which provides complete facilities to support the needs of the customers. EJIP
aims to become the leading industrial park in Asia which constantly stays a step ahead in providing customer satisfaction.
- Gunawan, Vice Secretary General, Himpunan Kawasan Indonesia / East Jakarta Industrial Park Environment Manager
“eJIP does not tolerate any violations against environmental damage. To avoid sanctions, we monitor all our tenants to comply with every environmental standard which are clearly regulated by the law. We facilitate our tenants with the necessary training to better manage the industrial area. as one of the pioneers for industrial estates, eJIP believes that industrial areas will not only need to improve competitiveness and support from its society, but also from manufacturers who wish to operate in Indonesia. apart from the economic aspect, there should be a balance between environmental and social aspect as well.”
Located in South Cikarang with total land size of 320 ha, populated by 101 tenants.
Major green practices
• Waste water treatment• Environmental
emergency response team
• Laboratory facility for environmental audit
• Fire protection
Awards or Standards
EJIP has been awarded by the Ministry of Industry as ‘The Best Performance in Environmental Management’ back in 2013. EJIP has also been awarded with “The Best Performance in Infrastructure and Facility” in 2013
pROFIlE OF East JakaRta INdustRIal paRk
www.solidiance .com18
Jababeka Industrial Estate is the first modern eco-Industrial estate in Indonesia. It was developed under joint cooperation of
Indonesia’s Ministry of Environment and Republic of Germany program, ProLH GTZ, with objectives to reduce the pollution
and health risks caused by the industries’ inefficient resource management. Jababeka aims at building modern cities across
the Indonesian province and provide working opportunities for a better life.
– Agus Canny, Director of Investment and Promotion Board, PT Kawasan Industri Jababeka
“Big foreign companies are considerably strict when it comes to environmental compliance. They won’t bother entering any estates which can’t support their needs for such facilities. In this case, we have our own estate regulation regarding such (environment) matters dated back from 20 years ago. on top of that, Jababeka surely also complies with the government’s regulation - we have our own lab, water plant, electricity and an internal team to ensure all compliances.”
Located in Kawasan Industri 1, Cikarang, West Java. Total land size is accounted for more than 2,000 ha and filled with more than 1,600 local and multinational companies.
Major green practices
• Implementation of water treatment plant
• Implementation of sustainable power plant
• Implementation of retrologistics• Managing hazardous waste to
licensed unit cleaning facilities
Awards or Standards
PT. Jababeka has been awarded for its outstanding development activities with the award for supporting housing development from the Ministry of Public Housing, and a CSR award for environmental sector from the Ministry of Social Affairs.
pROFIlE OF JaBaBEka INdustRIal EstatE
19www.solidiance .com
Kota Bukit Indah industrial city was one of the pioneers in Indonesia’s industrial estate managed by a private sector. Starting
from the needs of a manageable industrial area that is integrated and with permission from the government, Kota Bukit
Indah developed a sustainable industrial estate back in 1990 by two developers, i.e. PT Besland Pertiwi and PT Indotaisei
Indah Development.
- Irwan Makinto, Marketing General Manager, Kota Bukit Indah Industrial City
“We educate the local community about our industrial estate, introduce them to our key stakeholders, and give them educational support, tools and facilities on top of it. as an industrial estate, we did not merely build physical appearance, but we also built a good community around us. We have witnessed economic development of our local community, such as they have a better house now. In addition to that, every 6 months, our key stakeholders engage directly with the community as a way to interact with our local community.”
Located in Purwakarta with a total land area of 2,000 ha and populated with more than 90 tenants.
Major green practices
• Waste water treatment plant
• Pollution control (Air & Noise)
• City forest within industrial estate
• Waste management & lighting protection
Awards or Standards
Kota Bukit Indah is awarded with “Piagam Hutan Kota” by West Java’s government in 2011
pROFIlE OF kOta BukIt INdah INdustRIal cIty
www.solidiance .com20
MM2100 Industrial Town is a fully integrated industrial estate developed by PT. Megalopolis Manunggal Industrial
Development (MMID), established in 1990 by two well regarded corporation; Marubeni Corporation of Japan and Manunggal
Group of Indonesia. MM2100 aims to be Indonesia’s leading industrial provider of superior business environment and
services for manufacturing companies and related operations.
- Sri Suryanti, Environment Health and Safety Manager, MM2100 Industrial Town
“We strongly believe that the combination of people, planet and profit are all three aspects that cannot be implemented if one of them goes wrong. Therefore mm (mm2100) starts from giving a sense of security and health to people (both managers, tenants and the surrounding community), realizing the environmental management for the preservation of the planet. Profits will eventually follow through only when the people and the planet have been secured, and we will continuously improve on those issues.”
Located in West Cikarang and is one of the closest Industrial estate to Jakarta area. Total land size is accounted for more than 800 ha and filled with more than 170 local and multinational companies.
Major green practices
• Improvement of waste water treatment plant technology
• Laboratory Facility for environmental audit
Awards or Standards
MM 2100 Industrial Town is awarded a green certificate from PROPER Indonesia for two consecutive years.
pROFIlE OF MM2100 INdustRIal tOWN
21www.solidiance .com
Suryacipta City of Industry is planned, developed and managed by PT Suryacipta Swadaya as a full serviced industrial
estate, well equipped with infrastructure and supporting services back in 1990. They have successfully built a green and
environmental friendly industrial area with international standards and has been entrusted by hundreds of multinational
companies from more than 10 originating countries in multiple industries.
- Agus Sukarno S, Tenant Relation Manager, Suryacipta City of Industry
“sufficient attention on social and environmental aspects will only be costly if implemented to half of an extent. suryacipta feels that investing socially to the environment and to the surrounding communities will not only help manage the physical environment and social community well, but also receive support from society. That is return on investment that is difficult to be replaced.”
