This SEZ is also a critical juncture test for developing Eastern Indonesia, namely Sulawesi, Maluku, Kalimantan and Papua. These are all provinces sorely in need of human development and investment past the raw commodity processing trades of coal, oil and CPO.

Having previously worked on both the Chinese Tianjin and Pudong SEZ’s in the late 1990s, the Chinese model of endogeneity looms large here for opportunity and in avoiding past mistakes.

The Palu project offers some 1,500 hectares of land positioned on a deep water port that reaches up to 50 meters deep, enough to accommodate oil tankers and cargo ships. The land is in 3 phases of about 500 ha a phase, at this point only the first phase has developed some.

In fact, President Jokowi cancelled a visit there last month, sending a minister instead as the SEZ has still not found an ‘anchor’ tenant. Both the local and federal governments are pushing heavily the idea of public private partnerships (PPP), but a PPP is government and industry in the same bed, but dreaming different dreams. More on that at the end.

This endeavor will require a few things to create a workable SEZ. But the idea should not be just to create another mediocre SEZ in words, but an actual community integrated SEZ than can drive Indonesian economic growth, in particular for remote and unskilled areas. Some key points are in order of what needs to be done first.

Anchor tenant. This is key. The anchor tenant will define the type of SEZ Palu becomes. All contractors and vendors will ultimately orbit around the anchor tenant. Anchor tenants in China SEZs have included Motorola, Siemens and General Motors. Nonetheless before an anchor tenant can be formalized, the type of SEZ must be considered.

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