Preliminary Study Assesses SEZ Progress

Kompas/Bahana Patria Gupta

Java Integrated Industrial and Port Estate (JIIPE) mockup, Gresik Regency, East Java, Friday (3/9/2021).

JAKARTA, KOMPAS — The central government has evaluated progress on the development of special economic zones (SEZs) across the country. Optimal implementation and careful study of planning play an important role in progress on SEZ development.

According to the results of the evaluation conducted by the National SEZ Council in May 2021, three out of the total 15 SEZs assessed were proceeding well according to their investment realization targets. Of these, two were operating, namely the Galang Batang SEZ in the Riau Islands that focuses on bauxite processing and distribution, and the Mandalika tourism SEZ in West Nusa Tenggara (NTB). Meanwhile, the third is under construction: the Kendal SEZ in Central Java focusing on textiles, furniture, food and beverages, automotive and electronics production.

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"We have mapped out which SEZs are progressing well, which are progressing but slowly, and which are not progressing at all. If the constraints are related to external factors, it is understandable, but if they are internal factors resulting from incompetent management, the response will be different," acting National SEZ Council secretary Elen Setiadi said on Monday (6/9/2021).

According to the evaluation results, land acquisition for the Tanjung Api-Api SEZ in South Sumatra has not been completed and is well behind schedule. The National SEZ Council has submitted its recommendation to revoke the area’s SEZ status to President Joko Widodo.

KOMPAS/ADITYA PUTRA PERDANA

PT Master Kidz Indonesia building which produces children\'s toys, in the Kendal Industrial Estate with the status of a Special Economic Zone (KEK), in Kendal Regency, Central Java, Friday (3/9/2021).

Andry Satrio Nugroho, the head of the Institute for Development of Economics and Finance (Indef) Center of Industry, Trade, and Investment, said that there was no need for the high number of SEZs as at present if many were not progressing well. Several reasons were behind the slow progress of SEZ development. In addition to the impacts from the pandemic, there were fundamental problems like the lack of a careful study on planning, especially related to SEZ designation.

Finalizing plans

The Likupang SEZ in North Sulawesi formally gained SEZ status in 2019 but construction has not begun to date, as the master plan is still being finalized.

"We are in the process of preparing the master plan," Paquita Wijaya, the director of developer PT Minahasa Permai Resort Development (MPRD), said in Manado during a phone interview.

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MPRD plans to invest Rp 11 trillion up to 2024, but only a consortium of companies has so far expressed interest in entering the SEZ. In fact, in terms of supporting facilities, the National Road Management Center in Manado has completed construction on a 45.47-kilometer access road to the SEZ. Street light poles have also been installed.

The central government has built 205 homestays in three villages in the SEZ that offer free accommodation.

According to data from the Tourism and Creative Economy Ministry, the Likupang SEZ is expected to employ 65,300 workers by 2040 and to attract 162,000 foreign tourists by 2025.

In addition, the Arun SEZ Development and Management Board (BUPP) and partner PT Patriot Nusantara Aceh (Patna) are not working optimally.

Meanwhile, the Arun SEZ in Aceh was inaugurated as an SEZ four years ago, but its development has been hampered by land status issues. In addition, the Arun SEZ Development and Management Board (BUPP) and partner PT Patriot Nusantara Aceh (Patna) are not working optimally.

Kompas

One of the corners of the Mandalika Special Economic Zone, West Nusa Tenggara.

Patna director Marzuki Daham said initial capital of about Rp 12.5 billion had been injected into developing the SEZ but the money had been all used for office rent, worker salaries, and operating expenses. “A portion of the salaries of PT Patna employees have not been paid, but we are still working. There is hope that construction on the Arun SEZ will progress well," he said.

The head of the Aceh One-Stop Integrated Investment Service, Marthunis, said that only Rp 3.1 trillion in investment for the Arun SEZ had been realized, far below the target of Rp 15 trillion.

The country has 19 SEZs at present, 11 of which are industrial and the rest for tourism. The most recently established SEZ is the Gresik SEZ, known as the Java Integrated Industrial and Port Estate (JIIPE). The JIIPE gained SEZ status on 28 June 2021 and has 15 tenants, including PT Freeport Indonesia. (OKA/AIN/WER/AGE)

(This article was translated by Hendarsyah Tarmizi)