Indonesia to build two special economic zones of US$1.5b

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Indonesia set to build two new Special Economic Zones(SEZ) worth Rp22.2 trillion (US$1.5 billion) after its National Council on SEZ approved Nongsa Digital Park and Batam Aero Technic, both located in Riau Islands Province, as the country’ new economic zones.

“The two locations have approved to be designated as new economic zones after it met the requirements,” the Coordinating Minister for Economic Affairs Airlangga Hartarto said in a statement on Friday (07/10), adding the Council will soon recommend it to President Joko Widodo to stipulated the proposed with Government Regulation.

Soon after the proposed is established, the SEZ is given a maximum of 3 years until it ready to operate and the development evaluation is carried out annually. The new zones are expected to absorb labor and encourage the country’ economy, Hartarto said.

Enoh Suharto Pranoto, the Council Secretary, explained Nongsa Digital Park has ​166.45 hectares with a total investment of Rp16 trillion. It includes the Rp 1.092 trillion of the Regional Development Investment, and Rp14.908 trillion for tenants. The zone is expected will be absorbed as many as 16,500 people.

While Batam Aero Technic has ​​30 hectares with the main activities of the MRO(Maintenance, Repair, and Overhaul) industry. The investment value of the zone is Rp6.2 trillion up to 2030. The zone is expected will absorb 9,976 people in 2030, he noted.

PT. Taman Resor Internet, a subsidiary of PT Citra Agramasinti Nusantara was the proposer of Nongsa Digital Park. The company has so long plays on tourism, creative & IT industries, and industrial estates. The zone is considered ready due to its land has been controlled and its designation is in accordance with Presidential Decree No. 87 of 2011.

The zone is expected to be an entry point for international IT companies from Singapore and other countries. It projected can save the foreign exchange in digital business up to Rp30 trillion per year with the biggest contribution from the data center and international education sectors.

Meanwhile, PT Batam Teknik was the proposer of the Batam Aero Technic. The company began operating in 2014 at Hang Nadim International Airport, Batam, as a provider of aircraft maintenance and repair services. The company has known for its serving on the Lion Air Group maintenance service.

The zone is expected to save foreign exchange of 70 percent of the MRO needs of country’ airlines worth Rp26 trillion per year which has been flowing abroad. In the medium term, it is expected to be able to seize opportunities from the Asia Pacific market which has around 12,000 aircraft and business value of $100 billion by 2025.

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