Capital investment: SEZs sell like hot cakes
This article has been translated by PwC Indonesia as part of our Indonesia Infrastructure News Service. PwC Indonesia has not checked the accuracy of, and accepts no responsibility for the content.
Bisnis Indonesia - Penanaman modal: KEK laris manis
23 November 2022
By: Wibi Pangestu Pratama and Tegar Arief
The enthusiasm of investors towards special economic zones (SEZs) that are continuously developed by the government continues to increase along with the various incentives offered for the integrated areas.
Based on the data from the Coordinating Ministry for Economic Affairs obtained by Bisnis, from 19 SEZs in Indonesia, the government successfully obtained investment commitments of Rp146.11 trillion.
From those commitments, Rp105.26 trillion has been successfully realised, absorbing 47,827 workers.
Coordinating Minister for Economic Affairs Airlangga Hartarto said that commitments and investment realisations in SEZs could increase next year with 13 new projects this year.
“The construction of integrated economic areas such as SEZs is expected to boost even economic growth and create economic resources and new jobs,” Airlangga said to Bisnis on Tuesday (22/11).
He added that SEZ development was the main driver of the economy and a breakthrough regional development model in accelerating inclusive economic growth.
The development of these areas can also boost downstreaming to create added value, increase investment, create jobs, and open business opportunities in Indonesia.
“The development is required to strengthen the industrial structure that is an important factor in global competition,” he said.
The potential of capital investment in SEZs increases following the government’s policy to develop the areas to not be limited by industrial sectors. Other sectors that are being developed include tourism and health.
Industrial Estates Association (HKI) Chairperson Sanny Iskandar said that SEZs focusing on expansion would increase the attractiveness of the integrated areas in the eyes of investors.
However, there is still a challenge that hinders the existence of SEZs, which is location selection. Business players see location as the main factor in investing.
“Location selection and regional industry main competence are crucial. Without the main competence from the regional industry, doing anything will be difficult,” he said.
Besides location selection, technical issues must also be resolved, especially regarding permits and connectivity among agencies.
Institute for Development of Economics and Finance (Indef) economist, Aviliani added that the government must also organise the employment aspect in the special zones. The purpose is to prepare human resources that are in line with the needs of the industries that have high productivity.
“Incentives are also crucial so that there are interests to invest in the special zones,” he stated.
