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View all search resultsThe effectiveness of special economic zones in driving economic growth
Last year, only seven of the 22 SEZs exceeded their investment targets, including Nongsa in Batam, Kura Kura in Bali and Kendal in Central Java.
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PT Unilever Oleochemical Indonesia's (UOI) factory sits surrounded by oil palm trees in the Sei Mangkei Special Economic Zone (SEZ), North Sumatra. UOI is owned by PT Unilever Indonesia. (Unilever Oleochemical Indonesia/Unilever Oleochemical Indonesia)
T
he development of special economic zones (SEZs) is one of the government’s strategies to drive local and national economic growth.
SEZs are designed to attract investment, stimulate economic activity and accelerate regional growth. In practice, the implementation of many SEZs has been slower than expected.
While some SEZs have been more successful in attracting investment, fostering regional economic growth and creating employment, others have faced limitations.
Since 2015, the government has established 25 SEZs, including 13 industrial zones, eight tourism zones, three digital zones and one service-based zone. Of these, 21 are operational and five are under development.
According to the 2024 SEZ development report, cumulative realized investment in those zones reached Rp 263.4 trillion (US$16 million) as of December 2024.
These investments have absorbed 160,900 workers and involved 403 business entities. The growth trajectory has been notable, as total realized investment in SEZs rose sharply from Rp 17.9 trillion in 2021 to Rp 90.1 trillion in 2024. It shows the potential of SEZs as positive catalysts to economic growth.
The SEZs with the highest cumulative investment as of December 2024 were Gresik SEZ in East Java and Kendal SEZ in Central Java. Gresik SEZ reached Rp 92.8 trillion within two years of operation since 2022, while Kendal SEZ reached Rp 86.6 trillion within three years of operation since 2021. The surge in investment in these SEZs has contributed to increased local economic activity.
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