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SEZ developing at snail's pace amid lack of investor interest
The development of special economic zones (SEZ) in Indonesia is progressing at snails’ pace as investors remain reluctant to open factories in the designated areas despite promised government incentives.
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An aerial photo shows a micro, small and medium enterprises (UMKM) center in the Mandalika Special Economic Zone (SEZ) in Central Lombok. Coordinating Economic Minister Darmin Nasution has admitted that the development of special economic zones in the country is slow. (Antara/Ahmad Subaidi)
T
he development of special economic zones (SEZs) in Indonesia is progressing at snails’ pace as investors remain reluctant to open factories in the designated areas despite promised government incentives.
Coordinating Economic Affairs Minister Darmin Nasution said on Thursday, last week that realized investment in the country’s 13 SEZs totaled only Rp 21 trillion (about US$1.5 billion), or only about 25 percent of the total investment commitment of Rp 85.3 trillion.
In line with the low investment, the SEZs have also disappointed in terms of job creation, with only 8,686 people currently employed in the areas.
Darmin acknowledged that the number of SEZs that had begun operating was also below the government’s target. “Compared to our expectations, the number of SEZs we have is still [low],” he told the press in comments on investment realization and employment of the SEZs.
Under the 2015-2019 national medium-term development plan (RPJMN), the government targets to have a total of 17 SEZs. So far, however, it only has 13 SEZ, namely eight industrial SEZs and five tourism SEZs.
The 13 SEZs are Sei Mangke, Tanjung Lesung, Palu, Bitung, Morotai, Maloy Batuta, Tanjung ApiApi, Mandalika, Tanjung Kelayang, Sorong, Arun Lhokseumawe, Galang Balang and Singhasari. The government is preparing for another four SEZs, namely in Kendal (Central Java), Nongsa Batam (Batam), Likupang (North Sulawesi) and Batam.
Darmin said the development of the SEZ was initially intended to attract investment in downstream industries in regions that are rich in minerals and other natural resources. However, there was an apparent lack of interest from investors to enter and build factories in the SEZs, despite a number of facilities provided by the government.
