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Deals struck over Aceh economic zone

Deal or no deal: Coordinating Economic Minister Darmin Nasution (left) is in a serious discussion with Aceh Governor Irwandi Yusuf at the signing of five business agreements relating to the development of the Arun special economic zone in Aceh, at the Office of the Coordinating Economic Minister in Jakarta on Monday

Stefani Ribka (The Jakarta Post)
Jakarta
Tue, February 13, 2018

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Deals struck over Aceh economic zone

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span class="inline inline-center">Deal or no deal: Coordinating Economic Minister Darmin Nasution (left) is in a serious discussion with Aceh Governor Irwandi Yusuf at the signing of five business agreements relating to the development of the Arun special economic zone in Aceh, at the Office of the Coordinating Economic Minister in Jakarta on Monday. (Courtesy of Aceh provincial administration)

Development of the Arun Lhokseumawe special economic zone (SEZ) is on track with the signing Monday of five business agreements, as witnessed by the provincial administration.

The five business cooperation deals cover various sectors, including gas refineries, palm oil, plywood processing and cement logistics.

The Office of the Coordinating Economic Minister’s SEZ board secretary, Enoh Suharto, said the processing of palm oil was already ongoing and operations for it were expanding, while development in gas, palm oil and cement was still in the construction stage, with a launch of operations in the sectors expected by mid-year.

“The values of the investments aren’t big — around Rp 100 billion [US$7.3 million] to Rp 400 billion each. But they mark significant progress in the SEZ,” Enoh told reporters after the signing ceremony at the ministry building.

Aceh Governor Irwandi Yusuf, who witnessed the signing along with Coordinating Economic Minister Darmin Nasution, said he hoped to see the official inauguration of the SEZ in the second half of this year, sooner than the previous target of 2020.

The Arun SEZ, which was initiated on Feb. 5, 2017, is expected to attract investors focused on business in the agro-industry, paper, petrochemicals, oil and gas exports as well as liquefied petroleum gas (LPG) and liquefied natural gas (LNG) distribution.

The economic zone is managed and developed by PT Patriot Nusantara Aceh (Patna), a company set up by a consortium comprising state oil and gas firm Pertamina, state port operator Pelindo I, fertilizer producer PT Pupuk Iskandar Muda (PIM) and Aceh administration-owned infrastructure firm Perusahaan Daerah Pembangunan Aceh (PDPA). The consortium was the initiator of the SEZ.

Within the 2,600-hectare economic zone, there are 900 ha of unoccupied land, 540 ha of which is owned by PT Arun Natural Gas Liquefaction, which had shut down operations, while 81 ha is owned by Pertamina and 17 ha by Pelindo I. The land has been designated clean and clear.

The SEZ is practically an expansion project from existing industry in the area, where PT Asean Aceh Fertilizer and cement bag producer PT Kertas Kraf Aceh operate.

Pelindo I signed Monday an agreement to allow four companies to utilize its unoccupied land. They are palm oil processor PT Aceh Makmur Bersama, plywood processor PT Sinergi Tangguh Alam Raya, cement logistics provider PT Prosperity Building Material and gas firm PT East Continent Gas.

Another agreement was made between PT Patna and State Asset Management Agency (LMAN) on attracting investors to operate the latter’s idle LPG and LNG refineries.

The government aims to secure a total investment of $3.8 billion by 2021 in the area and make it a gas distribution center. Some petrochemical investors with Rp 6.5 trillion in total capital are applying for investment permits.

To accelerate construction of new businesses and attract more investors, Irwandi said better cooperation among the consortium members was essential.

“We need to work faster in the field, including by having Pertamina and PT Pelindo I provide PT Patna with capital injection so the latter can move faster,” he said during the signing ceremony.

PT PIM would also need to allow PT Patna to manage the former’s land inside the SEZ, while the appointed international consultant would need to swiftly finish the Arun SEZ business plan.

The central government, meanwhile has been urged to construct an international airport and national roads near the area.

PT Patna itself acts as a one-stop service center for investors in the SEZ looking to apply for business permits, which are often necessary for dealing with regencies and municipalities in Aceh and the provincial
administration.

Darmin lauded the progress and urged administrations to cooperate with private developers to accelerate construction of the SEZs in Bitung, North Sulawesi; Tanjung Api-Api, South Sumatra; and Morotai, North Maluku. Indonesia has 12 planned SEZs in total.

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