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President Joko Widodo on Monday launched three special economic zones (SEZs) across 2,200 hectares of land at the eastern part of the archipelago in a fresh bid to attract investment and spur economic growth in less developed areas.
The government aims to attract 110 trillion rupiah (US$7.73 billion) investment in the SEZs – in East Kalimantan, North Sulawesi, and North Maluku – and create 120,000 jobs by 2025, according to a statement from the coordinating ministry for economic affairs.
“We hope that the existence of SEZs will grow manufacturing and other industries so that we will no longer export raw materials, but products with higher added value,” the statement quoted Widodo as saying.
Investors in the SEZs get preferential treatment such as removal of import duties for manufacturing of export goods, as well as easier land and employment rules, including allowing expatriates to own properties within the zone.
Gunar Myrdal, an economist at PT Bank Maybank Indonesia in Jakarta, welcomed the move, saying stronger manufacturing activities were needed to boost underdeveloped areas in the archipelago.
“Some difficulties for realising more valued-added industries here are: a limitation on the capital investment budget, especially from the domestic investor side; a hesitation from big foreign investors to enter the industry due to long investment progress from the central government to the regions; less synergy between the central government with regional governments on investment regulation,” he said.