03 February 2026
Manufacturing Relocation Tailwinds Strengthen Indonesia’s Industrial Estate
Market Commentary
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The strategic collaboration between Himpunan Kawasan Industri Indonesia (HKI) and the Singapore Manufacturing Federation (SMF) strengthens Indonesia’s positioning as a regional manufacturing hub amid ongoing global supply chain relocation. The MoU aims to promote manufacturing investment, deepen regional supply chain integration, facilitate technology transfer, and develop industrial talent, reinforcing Indonesia’s attractiveness as a production base. Manufacturing contributes more than 18% to Indonesia’s GDP and is supported by over 175 industrial estates across key economic corridors, positioning the country as a prime destination for global industrial expansion—particularly for Singaporean companies seeking cost-efficient, scalable manufacturing capacity in Southeast Asia.
This partnership aligns with the broader China+1 and regional diversification trend, where multinational manufacturers are actively reallocating production away from China toward ASEAN economies. Indonesia’s large domestic market, improving infrastructure, competitive labor costs, and expanding industrial ecosystem provide a compelling value proposition relative to regional peers. As global corporates prioritize supply chain resilience and geopolitical risk diversification, Indonesia’s industrial estate developers stand to benefit from structurally higher tenant demand over the medium to long term.
Listed industrial estate developers such as KIJA, SSIA, and AKRA serve as direct proxies to this manufacturing relocation theme. In terms of land availability, SSIA controls ~1,656 hectares in Subang, KIJA has ~1,300 hectares in Cikarang and ~350 hectares in Kendal, while AKRA has ~1,000 hectares in Gresik. From an infrastructure perspective, KIJA and AKRA already have meaningful electricity capacity in place, supporting near-term tenant onboarding, while SSIA’s power infrastructure remains in the planning stage and could take 5–10 years to be fully realized, potentially delaying large-scale tenant ramp-up. Labor cost competitiveness also favors KIJA’s Kendal estate, where the minimum wage is ~Rp2.99mn, roughly 50% lower than Cikarang’s ~Rp5.94mn, and below Subang (~Rp3.74mn) and Gresik (~Rp5.20mn), despite comparable basic infrastructure—making Kendal particularly attractive for labor-intensive manufacturing tenants. Logistically, Cikarang benefits from proximity to Tanjung Priok (~35 km from Jakarta), Subang is close to Patimban Port, Kendal is designated as a Special Economic Zone (KEK) with access to seaport and airport, and Gresik is integrated with JIIPE Port, providing competitive export connectivity across all estates.
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We continue to prefer KIJA over SSIA and AKRA as the most compelling proxy to the manufacturing relocation theme. KIJA is not merely a land sales story, with more than 50% of revenue derived from recurring income, providing more stable cash flows and reducing reliance on cyclical land monetization. In Kendal, power income is already meaningful, with United Power generating Rp586bn in revenue (+87% YoY) despite only 51 out of 135 tenants currently operating, implying significant embedded growth potential as occupancy ramps up and industrial activity scales. Structurally, KIJA has no majority shareholder, making it relatively more flexible for potential corporate actions, strategic partnerships, or M&A activity, which could unlock further shareholder value over time.
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From a valuation standpoint, KIJA appears significantly undervalued, trading at ~0.7x book value and ~6.2x 2026E earnings, with our DCF implying a fair intrinsic value of ~Rp550 per share, excluding optionality from Tanjung Lesung and Morotai. Relative to peers trading above 1x PBV, KIJA offers the most asymmetric risk-reward within the industrial estate theme, combining structural demand tailwinds, growing recurring income, and deep value valuation—making it our preferred pick to capture Indonesia’s manufacturing relocation cycle.
This partnership aligns with the broader China+1 and regional diversification trend, where multinational manufacturers are actively reallocating production away from China toward ASEAN economies. Indonesia’s large domestic market, improving infrastructure, competitive labor costs, and expanding industrial ecosystem provide a compelling value proposition relative to regional peers. As global corporates prioritize supply chain resilience and geopolitical risk diversification, Indonesia’s industrial estate developers stand to benefit from structurally higher tenant demand over the medium to long term.
Listed industrial estate developers such as KIJA, SSIA, and AKRA serve as direct proxies to this manufacturing relocation theme. In terms of land availability, SSIA controls ~1,656 hectares in Subang, KIJA has ~1,300 hectares in Cikarang and ~350 hectares in Kendal, while AKRA has ~1,000 hectares in Gresik. From an infrastructure perspective, KIJA and AKRA already have meaningful electricity capacity in place, supporting near-term tenant onboarding, while SSIA’s power infrastructure remains in the planning stage and could take 5–10 years to be fully realized, potentially delaying large-scale tenant ramp-up. Labor cost competitiveness also favors KIJA’s Kendal estate, where the minimum wage is ~Rp2.99mn, roughly 50% lower than Cikarang’s ~Rp5.94mn, and below Subang (~Rp3.74mn) and Gresik (~Rp5.20mn), despite comparable basic infrastructure—making Kendal particularly attractive for labor-intensive manufacturing tenants. Logistically, Cikarang benefits from proximity to Tanjung Priok (~35 km from Jakarta), Subang is close to Patimban Port, Kendal is designated as a Special Economic Zone (KEK) with access to seaport and airport, and Gresik is integrated with JIIPE Port, providing competitive export connectivity across all estates.
From a valuation standpoint, KIJA appears significantly undervalued, trading at ~0.7x book value and ~6.2x 2026E earnings, with our DCF implying a fair intrinsic value of ~Rp550 per share, excluding optionality from Tanjung Lesung and Morotai. Relative to peers trading above 1x PBV, KIJA offers the most asymmetric risk-reward within the industrial estate theme, combining structural demand tailwinds, growing recurring income, and deep value valuation—making it our preferred pick to capture Indonesia’s manufacturing relocation cycle.
Written by Boris, the Broker
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