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Govt to introduce industrial zone regulation next month

The government is set to launch a new regulation on industrial zones by year-end in an effort to expedite the development of industrial zones outside Java and spur economic growth in the regions

Khoirul Amin (The Jakarta Post)
Jakarta
Fri, November 27, 2015

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Govt to introduce industrial zone regulation next month

T

he government is set to launch a new regulation on industrial zones by year-end in an effort to expedite the development of industrial zones outside Java and spur economic growth in the regions.

The Industry Ministry'€™s research and development department head, Haris Munandar, said on Thursday that the new government regulation on industrial zones would provide incentives such as a tax holiday, tax allowance and lower tariffs.

It would also ensure that infrastructure would be well-developed outside Java, where the industrial zones would potentially be established, according to Haris.

'€œThere has been a bit of a problem in the draft in which the [State] Secretariat rejected a clause that allows land acquisition to develop industrial areas by using the argument of public interest,'€ he told reporters.

Land acquisition has become one of the major challenges preventing the kickoff of a number of projects in the country. A much-awaited 2 x 1,000 megawatt (MW) coal-fired power plant in Batang, Central Java '€” which will be the largest in Southeast Asia '€” is still pending the clearance of around 12 hectares of land.

Haris added that the ministry had come up with a new clause that would still ease land acquisition for the development of industrial areas without using the previously mentioned clause.

He told reporters that a draft of the new government regulation had been discussed at the State Secretariat and was now undergoing revision.

The new rules on industrial zones will be launched as part of the government'€™s next stimulus package. '€œIt [the new regulation] has to be done by this year as this is included in the policy package,'€ Haris added.

Sofjan Wanandi, the chairman of the Vice President'€™s advisory team, said previously that the government would possibly launch its seventh economic policy package next month focusing on the labor-intensive industry, among other things.

Investment Coordinating Board (BKPM) deputy for investment planning Tamba Parulian Hutapea said that the government aimed to develop a total of 16 new industrial zones by 2019, with 14 of them set to be outside Java.

'€œThe new industrial zones will expand the country'€™s industrial area to around 78,000 hectares from the current 40,000 ha,'€ he said.

Tamba said that the expansion of industrial zones outside Java was aimed at making investment and development in each province more evenly spread.

In the January-September period of this year, 19.9 percent of total local and foreign direct investment poured into West Java and 11.8 percent went to East Java, according to data from the BKPM. West Java is currently home to giant industrial zones like MM2100 and Karawang International Industrial City (KIIC).

Haris said that a number of investors, particularly those from China, had expressed their interest in planned industrial areas outside Java, such as those in Morowali, Central Sulawesi, and Konawe, Southeast Sulawesi.

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