SEZ JIIPE, Gresik - East Java ready
to ensures ease of doing business

The question of why it is difficult to do business in Indonesia doesn’t seem to be relevant any more, at least when you explore special economic zones (SEZs).

If you get adequate knowledge of an SEZ, then the right question becomes, “How can SEZs ensure ease of doing business?” SEZs are designated areas endowed not only with incentives but also with full government support with respect to infrastructure, security and high standards to serve as a competitive market for investment. On top of that, bureaucratic reform has also been conducted under the President Joko “Jokowi” Widodo administration, with the Online Single Submission (OSS) platform becoming the main place where businesses start their incorporation process.

A thriving industrial estate currently at center stage is Java Integrated Industrial and Port Estate (JIIPE), located in Gresik, East Java, a province whose economic grow is largely driven by trade and industry.

JIIPE Kawasan Industri Gresik boasts the first integrated area in Indonesia, with a total area of 3,000 hectares, comprising industrial estates, multifunctional public ports and residential cities.

The JIIPE industrial area covers 1,761 hectares with 400 hectares of sea port facilities and 800 hectares of residential area with the concept of an independent and green city. The industrial estate is one of two areas named SEZs in 2021, adding to the existing 17 SEZs.

Bambang Soetiono, President Director of PT Berkah Kawasan Manyar Sejahtera, which operates SEZ JIIPE says the establishment of JIIPE was to accommodate President Jokowi’s aspiration to boost the competitiveness of Indonesian products by allowing investors to build factories in the country.

“So we provide land for that purpose,” he said in a recent zoom interview.

President Jokowi visited JIIPE in 2015 when laying the first stone for the industrial estate construction project and in 2018 when officially inaugurating JIIPE.

According to Bambang, prior to being named an SEZ, JIIPE was a National Strategic Project, with focus given on handling licenses related to land and infrastructure development.

“After the basic infrastructure was put in place, JIIPE was elevated to SEZ status and we are now focusing on ensuring ease of doing business for investors and business players,” he explained.

When it comes to getting a business license and other required documents, such as a building permit, environmental impact assessment (AMDAL) permit and operational permit, JIIPE makes it fast and easy as JIIPE management handles all of the business licensing under one roof, so business players do not need to bother themselves with going from one office to another as long as they have approval from the Investment Coordinating Agency (BKPM), according to Bambang.

“Our one-stop service accommodates all investment needs. Provided all the requirements are filled, the handling of the documents can be completed within two days,” he said.

When it comes to land purchases, JIIPE is also flexible in terms of land permits and payment. “Land buyers have more time to prepare the land permit. The important thing is that they submit the land permit prior to starting commercial production, while the land payment can be settled under an agreed installment scheme,” he said.

Sustainability

JIIPE provides industrial land with a clustering system to enhance tenants’ synergy and sustainability. The five clusters available are the metal industry cluster, the electronics industry cluster, the chemical cluster, the energy cluster and the multipurpose and logistics cluster.

A gas-fired power plant, clean water treatment and waste water treatment, gas supplies, multiple modes of transportation and other supporting utilities are available in JIIPE.

“Tenants in need of electricity or gas for their factory or houses will be served immediately,” he said.

With employees living not far from the factories or offices, they don’t have to spend money on transportation. “They just go to their factory or workplace by cycling, which is healthy,” he said.

JIIPE combines the development of information technology and industry to align with the industrial revolution 4.0, which will make businesses run more productively and efficiently.

Bambang also highlighted environmental protection, one of the elements of sustainability.

“The air here is clear and free of CO2 emissions because we use a gas-fired plant to meet power needs,” he said. According to Bambang, JIIPE is conducting a study on utilizing solar energy as a source of electricity by collaborating with tenants to place solar panels on their building, which will make JIIPE greener.

In addition to being free of bureaucratic hurdles, JIIPE also offers many benefits that business players or investors can reap, which include incentives, labor costs and potential markets.

When it comes to incentives, a tenant that invests a minimum of US$6.9 million (Rp 100 billion) is entitled to 10 years of zero corporate income tax (CIT) and a tenant that invests a minimum of US$67 million (Rp 1 trillion) will receive zero CIT. “All designated industries will also enjoy reduction in net income of 30 percent of the amount invested, prorated at 5 percent for six years,” he noted.

“Property holders and senior foreigners can gain permanent resident status,” says Bambang, giving an example of a non-fiscal incentive.

Reduced logistics costs

With SEZ having a number of benefits favoring JIIPE tenants, JIIPE also answers the issue of high logistics costs thanks to its being integrated with multipurpose ports, three modes of transportation to reach domestic and global international markets, from a nearby deep sea port, 3.5 kilometers from Krian Legundi Sunder Manyar Toll Gate, and the direct toll railway. The attached port is strategically located in the mouth of the Madura Straits and is part of the Surabaya port district. Designed with 6,200 meters of total berth length and final water dept of -16 meter LWS, the port caters to capsize vessels up to 100,000 DWT.

The volume of cargo handled at Gresik SEZ port, which started operation in 2015, was up to 2 million tons and is projected to increase to 6 million tons following the completion of the jetty extension project in June 2021.

The port, which is about three kilometers from factories, plus the five-lane highway, enable transported goods or products to reach the harbor punctually and even earlier than scheduled,” he said.

“Tenants do not only save time traveling to the port but also save travel expenses, which, economically, means reduced logistics cost. The logistics reduction cost ranges from 18 percent to 20 percent,” said Bambang.

“Goods or products that reach the port for unloading earlier than scheduled are entitled to dispense or discount from the freight,” he said.

“From the start, JIIPE was designed to reduce logistical costs nationally in addition to simplifying the procedure for business licensing,” he said.

What about security?

Security is paramount for business players to do their activities.

JIIPE has only one gate to enter or exit the area. “We have a security post at the entrance. All passengers will be checked here, including for COVID-19 protocols,” said Bambang.

According to Bambang, JIIPE is located in secure area, about five miles from Madura island and far from settlements because it is separated by a river on the left and the right sides.

This explains why gold and copper mining giant PT Freeport Indonesia and Bank Indonesia (BI), the country’s central bank, plan to build a smelter and money printing plant respectively.

“Freeport plans to conduct a groundbreaking on the construction of a smelter in early October 2021,” Bambang said. Freeport and BI will add to the existing 15 tenants in operation in JIIPE since its operation in 2018.

According to Bambang, the ongoing COVID-19 pandemic hasn’t deterred investors’ interest in investing in JIIPE, with more having signed deals to do business in the industrial estate.

Recently JIIPE signed an MoU with several companies, one of which was from Taiwan, to set up a vaccine factory. The signing was conducted online. “We have also signed an MoU virtually with the Taiwanese Coordinating Investment Agency. The agency facilitates Taiwanese investors eager to do business in JIIPE,” he said.

“I am confident that when the pandemic is over, more and more companies will do business in JIIPE,” he said.

JIIPE is a joint venture between PT AKR Corporindo Tbk, a publicly listed distributor of basic chemicals and petroleum products, and state-owned port operator PT Pelabuhan Indonesia (Pelindo) III.

Investors looking forward to doing business in Indonesia have the right to decide which industrial estate they choose. But integrated JIIPE with its SEZ status and complete and cutting-edge facilities will meet your investment needs and allow you to do business in comfort.

By choosing JIIPE as a site for your business activities, you’ll eventually get the answer to how JIIPE can ensure ease of doing business.