Many Factories Move From West Java To Central Java, Ministry Of Industry: During Production In Indonesia We Support

JAKARTA - The phenomenon of moving a number of factories from West Java to Central Java is said to have occurred in recent years. The change in production locations is believed to be triggered not only by cost factors, but also the company's strategy in rearranging supply chains and operational efficiency.

Regarding this trend, the Ministry of Industry (Kemenperin) emphasized that the government will not hinder relocation steps as long as the industry continues to carry out production activities in the country.

The change in location is said to be part of the business dynamics that must be addressed fairly. Moreover, the company has a basis for each calculation related to capacity needs, labor costs to business sustainability.

Spokesperson for the Ministry of Industry Febri Hendri Antoni Arif said the government has an interest in ensuring that the industrial ecosystem continues to grow at the national level.

"Regarding the industry moving from one province to another, in principle, as directed by the Minister (Agus Gumiwang) that as long as the industry is still operating and producing in Indonesia, we will continue to support it," said Febri in the release of the Industrial Trust Index (IKI) November 2025 at the Ministry of Industry Building, Jakarta, Thursday, November 27.

The expansion and transfer strategy of factories cannot be equated because each company faces different challenges. Some consider incentives for industrial estates, pursue logistical efficiency and not a few choose a location close to new labor sources.

According to Febri, the government has no intention of limiting the flexibility of business actors in determining the location of production.

"We invite the industry to choose where according to them the optimal industrial location according to their considerations," he added.

For information, throughout 2019-2022, 28 labor-intensive factories in West Java moved to Central Java. Then in 2023, there are about five labor-intensive factories out of West Java. Then, in 2024 there will be layoffs in West Java.

The phenomenon of factory relocation to Central Java does not only occur in West Java and Banten, but also in Jakarta. This is illustrated by the incident in the Nusantara Bonded Area (KBN). One by one the factories have started to relocate their production from the area.

The trend of moving factories from Banten, Jakarta and West Java to a number of areas in Central Java is said to be due to differences in the provincial minimum wage in the two areas.

It is known that the 2025 Banten UMP is set at IDR 2,905,119, while the Central Java UMP is IDR 2,169,348. Jakarta is listed as the province with the highest UMP, which is IDR 5,396,760.

Executive Director of the Center of Economic and Law Studies (Celios) Bhima Yudhistira did not deny that the UMP in Central Java is the allure of investors to relocate their factories to the region.

However, in addition to wages, the high number of illegal levies or extortion in the old industrial area can also be the cause of companies choosing to move to Central Java. In the province, said Bhima, the problem of extortion is much lower.

"Then the development of new industrial areas is also massive in the Kendal, Brebes and Batang areas. There is a focus on developing industrial infrastructure in Central Java and it attracts factory relocation," explained Bhima.

The phenomenon of the transfer of companies from West Java and Jabodetabek to Central Java has also attracted the attention of senior economist Bambang Brodjonegoro. He considered that this should be a concern if the local government does not want to lose its investors.

"The local government must try if, for example, they don't want the UMP increase to be too big, making entrepreneurs move to other areas," he said.

According to Bambang, the percentage increase in the UMP actually reflects the performance of each region in managing inflation. For this reason, local governments must be able to maintain a balance between the need for wage increases and the company's ability to pay for them.

"Regional inflation must be maintained and it can later create a balance," he continued.