In recent years, the world has been rapidly moving towards an era of energy transition and green industry. Developed countries are racing to build environmentally friendly supply chains, while global companies are seeking strategic locations to develop low-emission production bases. Amid these significant changes, Indonesia has a golden opportunity to play a significant role as one of the world’s green industry hubs.
One of the most ambitious projects attracting international attention is the development of the Indonesian Green Industrial Zone (KIHI) in North Kalimantan. This project is not just an ordinary industrial zone, but a strategic step to transform the national industrial structure, attract foreign investment, and strengthen Indonesia’s position in the global economic map, focusing on sustainability. With a vast land area and supported by clean energy from the Kayan Hydroelectric Power Plant (PLTA), KIHI is touted as the largest green industrial zone in the world.
The massive scale of this project certainly brings extraordinary economic opportunities, but also significant risks. This is where the role of insurance protection and a professional insurance broker becomes crucial to ensure the long-term sustainability of the project. To support a major project like KIHI, L&G Insurance Brokers is ready to be your strategic partner in designing a comprehensive risk protection solution. Contact us at📞 0811-8507-773for further consultation.
Background of KIHI Development
The development of the Indonesian Green Industrial Zone (KIHI), located in Tanah Kuning-Mangkupadi, North Kalimantan, is one of the most ambitious national strategic projects ever designed by Indonesia. The area covers over 30,000 hectares, making it the largest green industrial zone in the world. The project was initiated by the Indonesian government, strategic state-owned enterprises (SOEs), and private partners as an effort to realize economic transformation toward a clean and sustainable energy-based industry.
The government has designated KIHI as a key focus in its long-term development agenda due to its high strategic value, both economically and geopolitically. The area will rely on electricity from the Kayan Hydroelectric Power Plant, a large-capacity hydroelectric project that harnesses the potential of North Kalimantan’s rivers. With this renewable energy source, KIHI is designed to become an environmentally friendly global production base, in line with global trends that increasingly demand sustainability in industrial supply chains.
The KIHI initiative is also part of the government’s efforts to attract large-scale foreign investment. The government is offering a number of fiscal and non-fiscal incentives, simplified licensing, and national strategic area status to expedite project implementation. Furthermore, KIHI’s geographic location, close to international shipping routes, provides added value in terms of global trade connectivity.
Overall, KIHI is not just another industrial project, but a significant milestone in Indonesia’s journey to becoming a major player in the international green industry, while also creating a new economic center of gravity in Kalimantan.
KIHI Strategy and Vision
The development of the Indonesian Green Industrial Zone (KIHI) is not just a physical project, but part of Indonesia’s broader strategy for comprehensive industrial transformation. The government, along with strategic partners, has envisioned KIHI as an integrated green industrial zone that prioritizes the use of renewable energy, low-emission technology, and circular economy principles.circular economyThis area will become a model for future industrial development that is sustainable and globally competitive.
A key element of KIHI’s strategy is the utilization of the Kayan Hydroelectric Power Plant (PLTA) as the region’s primary energy source. This hydroelectric power plant is designed with a large capacity sufficient to meet the energy needs of the entire industrial area, allowing tenants within it to operate with a significantly lower carbon footprint than conventional industrial areas. This approach will attract export-oriented industries that require green energy to meet international sustainability standards.
KIHI is also designed to be developed in stages over several long-term development phases. Each phase will focus on a specific industrial sector, such as green steel, electric vehicle batteries, green chemistry, and high-tech manufacturing, creating an integrated industrial ecosystem. With this strategy, KIHI will become not only a production area but also a hub of innovation and a major attraction for global investors seeking production locations with high environmental standards.
KIHI’s Appeal to Global Investors
The Indonesian Green Industrial Estate (KIHI) offers a unique combination of natural resource advantages, progressive government policies, and large-scale green energy infrastructure, making it a strategic investment destination for global industries. One of KIHI’s key attractions is the guaranteed availability of renewable energy through the Kayan Hydroelectric Power Plant, which allows tenants to operate on 100% green energy. This is particularly relevant for multinational companies committed to decarbonization targets and compliance with global emissions regulations.
Furthermore, KIHI is strategically located near international shipping routes, simplifying import-export logistics. The Indonesian government also provides various fiscal and non-fiscal incentives, including ease of licensing, tax holidays, customs facilities, and basic infrastructure support such as ports, roads, and modern utility systems. All of this creates a competitive and efficient investment environment.
KIHI is also designed as an integrated industrial ecosystem. Investors gain not only land and energy, but also access to a robust domestic supply chain, competent human resources, and opportunities to collaborate with other national and international companies. With strong political support and the government’s long-term vision, KIHI is projected to become the largest green industrial hub in Southeast Asia, attracting strategic sectors such as renewable energy, electric vehicles, green raw materials, and high-tech.
Investment Opportunities and Prospects in KIHI
The development of the Indonesian Green Industrial Zone (KIHI) opens up vast investment opportunities across various strategic sectors, for both domestic and global industry players. With a development concept based on renewable energy and a sustainable economy, KIHI is an ideal ecosystem for companies looking to shift operations to greener, more efficient, and globally competitive locations.
Some sectors that have promising investment prospects include:
- Renewable Energy and Green Technology
KIHI serves as the primary base for green energy utilization through the large-capacity Kayan Hydroelectric Power Plant. Investors can participate in clean energy projects such as power plants, energy storage technology, and transmission and distribution infrastructure. - Electric Vehicle (EV) and Battery Industry
With the global trend toward net-zero emissions, KIHI has significant potential as a manufacturing location for batteries, electric vehicles, and their supporting components. Its proximity to raw material sources such as nickel and bauxite strengthens the industry’s competitiveness. - Raw Material Processing and Downstream Processing
Kalimantan boasts abundant natural resources such as minerals, forest products, and energy. KIHI offers opportunities to establish export-oriented processing and downstream factories by leveraging fiscal incentives and logistical convenience. - Technology and Supporting Industries
Companies in the fields of information technology, industrial automation, construction, and logistics also have a great opportunity to provide supporting solutions for KIHI’s main tenants.
In addition to these sectors, long-term projections indicate rapid growth in this region over the next 10–20 years. The government aims for KIHI to become a new economic hub for Indonesia, capable of attracting hundreds of trillions of rupiah in investment and absorbing thousands of skilled workers. The combination of policy support, resource potential, and the global trend toward green industry makes this region a key driver for growth.CORNERbecome a magnet for future investment.
The Role of Insurance in Supporting Investment in KIHI
The development and expansion of large-scale areas such as the Indonesian Green Industrial Zone (KIHI) requires not only investment capital and high-tech technology, but also a robust risk management system. In this context, the insurance industry plays a crucial role in ensuring smooth, sustainable, and secure operations for investors and industry players.
Every project at KIHI faces various risks, ranging from construction and installation risks of high-tech equipment, factory operational risks, potential supply chain disruptions, natural disasters, and financial risks due to global market uncertainty. This is where insurance plays a strategic role in protecting the project. Through products such as Contractor’s All Risks (CAR), Erection All Risks (EAR), Property All Risks (PAR), Marine Cargo Insurance, Liability Insurance, and Business Interruption Insurance, investors can protect their assets and cash flow from various potential unforeseen losses.
Furthermore, the presence of a professional insurance broker plays a crucial role in bridging the interests of investors with insurance companies. An experienced broker not only helps design an insurance program tailored to the project’s characteristics, but also negotiates policies, ensures completeness of coverage, and assists with the claims process in the event of an incident.
L&G Insurance Brokers is a broker experienced in assisting various national strategic projects. With a long track record in the infrastructure, energy, and industrial sectors, L&G is ready to assist KIHI investors in developing optimal insurance protection programs, ensuring the long-term security of their investments.
Strategic Conclusions and Recommendations
The Indonesian Green Industrial Zone (KIHI) is more than just an ordinary industrial zone project, but a national strategy to position Indonesia as a hub for green industry and clean energy in Southeast Asia. Supported by renewable energy resources, a strategic location, investment incentives, and continuously developing infrastructure, KIHI is a new magnet for global investment, particularly in high-tech and environmentally friendly sectors.
However, maximizing this enormous potential requires a comprehensive strategy from various parties. The government needs to ensure regulatory certainty and long-term sustainability of incentives. Investors need to prepare thorough plans and expansion strategies that adapt to global trends, particularly the demand for carbonization and the green supply chain. Meanwhile, industry players must actively build cross-sector collaboration to create a productive and competitive green industrial ecosystem.
From a risk mitigation perspective, the role of insurance and insurance brokers is crucial. Given the large scale of investments and the complexity of projects at KIHI, comprehensive insurance coverage will be a crucial foundation for maintaining business continuity and maintaining the company’s cash flow. With the support of experienced brokers, investors can obtain effective and efficient protection solutions, including the claims process when risks actually occur.
KIHI is a golden opportunity for industry players seeking to take a strategic position in the global energy transition era. To ensure your investments are well protected, discuss your project and industrial insurance needs with L&G Insurance Brokers, your trusted partner in strategic risk protection.📞Contact us at+62 811-8507-773 for more information.
