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Govt tips three areas for new economic zones
As part of a measure to redistribute economic activities across the archipelago, the government will propose turning Tanjung Api-Api in South Sumatra, Morotai in North Maluku and Mandalika in West Nusa Tenggara into special economic zones (KEKs)
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As part of a measure to redistribute economic activities across the archipelago, the government will propose turning Tanjung Api-Api in South Sumatra, Morotai in North Maluku and Mandalika in West Nusa Tenggara into special economic zones (KEKs).
Coordinating Economic Minister Hatta Rajasa said on Tuesday that the proposed areas would add to the existing KEKs, which include Sei Mangke in North Sumatra and Tanjung Lesung in Banten.
'The KEK National Board meeting has conducted an evaluation of the existing KEKs and has deliberated on the inclusion of three new zones. Proposals for the new zones will be submitted to the President for approval,' said Hatta.
According to regulations on KEKs, businesses operating in the zones will receive various incentives such as tax reductions and exemptions, fulfillment of various basic infrastructure and, supposedly, hassle-free red tape.
KEKs regularly house, among other things, export processing zones and industrial park estates.
The government has planned to develop Tanjung Api-Api as a center of coconut-based industries, in addition to downstream processing for rubber and mineral ore, particularly the process of turning coal into gas, according to Hatta.
Initial investment into the zone will be carried out by state-owned fertilizer company PT Pupuk Sriwidjaja, which is expected to pour Rp 2.7 trillion (US$228 million) into the project and PT Taiba, which is slated to spend $1.4 billion on the coal processing industry, added Hatta.
Other companies include PT Hanaruba Sawit Kencana with an investment of Rp 137 billion.
The project requires infrastructure development costing around Rp 12 trillion.
As for Morotai, the government has plans for the zone to focus on developing the fishery industry, manufacturing and tourism.
Among the investors indicating their interest are the Taiwan International Cooperation and Development Fund (ICDF), Evergreen, Everspring Marine, Kinpo Elektronik, CTCI Corp and Advance Green Biotechnology.
'They have registered their interest in developing the zone, which is in close proximity to Taiwan and Japan,' said Hatta.
The development of Morotai will require Rp 6.8 trillion.
The proposed KEKs will also cover the tourism industry, which will be allotted to Mandalika. Hatta has estimated that the region will need around Rp 2.2 trillion for development.
PT Bali Tourism Development Corporation, PT MNC Land and PT Gobel International are among the interested investors.
The development of the KEK regions is part of the government's policy under the Master Plan for the Acceleration and Expansion of Indonesian Economic Development (MP3EI) program.
The program is a set of plans and actions to build economic clusters and business centers on all of Indonesia's major islands to support their unique local economies.
The centers are defined as six economic development highways, mostly located along coastlines, which will connect economic growth centers on five islands: Java, Sumatra, Kalimantan, Sulawesi and Papua.
For example, the northern coast of East Java will be developed as a hub for the petrochemical and shipbuilding industries while, in the province's inland areas, the food and beverage sectors will be developed.
While businesses praise the policy, its implementation remains slack.
The construction of Sei Mangke KEK, for example, has revealed how investors are being hindered by severe and costly burdens, as well as time and legal uncertainties, in dealing with bureaucracy. (alz)
