Land Acquisition Crucial for SEZs

Regions have greeted with euphoria the government’s policy to ease investment with promises of various incentives in the proposed development of special economic zone, but land acquisition remains a crucial issue.

KOMPAS/ADITYA PUTRA PERDANA

Vehicles pass at the gate of the Kendal Industrial Estate with the status of a Special Economic Zone (KEK), in Kendal Regency, Central Java, Friday (3/9/2021). The main business fields in the Kendal SEZ are the textile and clothing industry, furniture and game equipment, food and beverage, automotive, electronics, and logistics.

JAKARTA, KOMPAS – Smooth progress in land acquisition is one of the crucial challenges that will also help contribute to the success of in Special Economic Zones (SEZs) development.

The SEZ National Council’s 2020 annual report identifies land acquisition as an obstacle to investment, along with infrastructure and utilities provision, as well as regulatory overlap.

As land acquisition remains an issue for developing a number of SEZs, the government has revised Law No. 39/2009 on SEZs with Law No. 11/2020 on job creation and its implementing regulations.

Provisions on land acquisition are stipulated more strictly in Government Regulation No. 40/2021 on SEZ development. All proposals on SEZ development must meet the requirement that the proposed development area is at least 50 percent from acquisition problems. The previous regulation did not contain provisions on minimum land tenure.

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Indonesian Industrial Estates Association (HKI) chairman Sanny Iskandar said when contacted last week that the SEZs development plan had been met with euphoria.

The regions were enthusiastic about the government’s promises of fiscal facilities and incentives. However, it was often the case that problems arose over land acquisition and funding at the outset of SEZ development, as the land in the proposed development area was often not ready.

As a result, when the government issued a regulation designating the area as an SEZ, land prices soared to trigger speculators and the SEZ developer or management found it difficult to acquire the land.

Deputy Investment Minister Imam Soejoedi, who oversees investment management and control, suspects that speculators were masquerading as industry players.

KOMPAS/KRISTIAN OKA PRASETYADI

The Bitung Special Economic Zone in North Sulawesi is still not completely built so it has not been operational until Sunday (5/9/2021). Although it is targeted to bring in an investment of Rp 32 trillion by 2030, the SEZ which was inaugurated by President Joko Widodo in 2019 has now become an informal settlement.

An SEZ development in Sulawesi, for example, had registered more than 20 companies but only two small-scale companies had realized their investments by establishing their factories.

Investment Minister Bahlil Lahadalia highlighted the issue during his visit to several SEZs. “Many have reserved [the land], but none have taken action. [I assume] they just reserved the land and are seeing whether the [area] becomes robust in four to five years before they start building, or even lease or sell [the land]," he said.

Of the 534 hectares of land designated as the area of the Bitung SEZ, only 99.59 hectares are free of disputes. SEZ Bitung administrative secretary Julius Talimbekas said the SEZ’s management was preparing to offer purchase rates to landowners to acquire more land.

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Regarding the issue, the West Nusa Tenggara (NTB) provincial administration, which manages the Mandalika SEZ, has stressed the importance of tackling any technical problems that arose so land acquisition and land permits would no longer be obstacles to development.

NTB Deputy Governor Sitti Rohmi Djalillah appealed to all parties to ensure that the province was investment-friendly on the occasion of inaugurating opening the 2021 Region IV Investment Coordination.

The Mandalika SEZ is to be the venue of the MotoGP, with construction on the racing circuit near completion. The area is expected to accelerate tourism growth.

KOMPAS/ISMAIL ZAKARIA

Two traders walk in the Kuta Mandalika beach area in the Mandalika Special Economic Zone (SEZ) which looks deserted, Tuesday (30/3/2021). The quietness of the Mandalika area, including other tourist areas in Lombok, is due to the outbreak of the Covid-19 pandemic.

Gresik SEZ

Not all SEZs face land problems. Infrastructure is reportedly already in place for developing the Java Integrated Industrial Port and Estate (JIIPE) SEZ, including the land. Located in Gresik, East Java, the government designated as a SEZ only this year.

JIIPE operator PT Berkah Kawasan Manyar Sejahtera has acquired 1,300 ha of the SEZ’s total 1,761 ha, according to Iskandar J.K. Rares, manager for business development, sales and marketing.

"In terms of road infrastructure, we also have highways across the area," he said.

After clearing land-related obstacles to developing the JIIPE, said Iskandar, the operator needed only to coordinate with the regency and provincial administrations, as well as with Jakarta.

Rachman Arief Dienaputra, who heads the regional infrastructure development agency at the Public Works and Housing Ministry, said that land tenure was one of the main requirements for SEZs to prevent the infiltration of land speculators. (AGE/LKT/MKN/OKA/ZAK/WER/AIN)

This article was translated by Musthofid.