Tempo de leitura: 4 minutos
In 2015, President Joko Widodo inaugurated Indonesia’s first special economic zone in North Sumatra. Located near major palm oleochemical plantations, the Sei Mangkei SEZ serves mainly as an industrial hub for firms that want to be close to palm oil feedstock. Unilever, which has maintained a presence in Indonesia since the 1930s, opened its first palm oil refinery in the SEZ a few months later.
Fast forward to 2026, there are now 25 SEZs operating in Indonesia, with another seven under development. At the end of 2025, they accumulated total investment of Rp335tn ($19.7bn) and employed 248,459 people, according to figures from the National Council for Special Economic Zones (Indonesia SEZ).
Ironing out local business challenges
Investing in Indonesia can be challenging. The country has typically fared poorly in international ease of doing business studies. As concerns foreign investors in particular, the OECD FDI restrictiveness index places Indonesia as the 11th most challenged country for foreign investors of the 84 countries surveyed.
Regulations and laws often overlap and contradict one another, vested interests push nationalist policies such as local content requirements, and basic business operations like acquiring permits, licenses or land can be cumbersome. The impetus behind the SEZ strategy was to create zones with special legal and administrative authorities that could cut through these bottlenecks and support economic growth and development.
The country’s SEZ strategy began with a 2009 law designed to attract investment into high-value manufacturing, tourism and digital services, with an emphasis on industries that could generate exports and foreign exchange.
SEZ investors are entitled to tax holidays and duty exemptions for certain imported goods. The process of acquiring building permits and land is streamlined, and administrative approvals are channelled through a simplified one-stop licensing system designed to cut red tape. Investors also benefit from relaxed immigration requirements.
Implementation was slow until a 2021 reform clarified key regulatory issues and reaffirmed the state’s support. Investment accelerated rapidly after that, with an influx of new projects in recent years, including a new wave of developments by Chinese investors.
Regional imbalance
According to data from Indonesia SEZ, as much as 83.5 per cent of the total came through between 2020 and 2025. However, even as investment gathers steam it has been distributed unevenly and is concentrated primarily in a few high-profile areas.
The largest recipient is Gresik, an industrial district in East Java that is part of an integrated port facility. At the end of 2024, the Gresik SEZ reported total accumulated investment for Rp93tn, according to Indonesia SEZ data. However, most of it came from Freeport-McMoRan, the US mining giant that spent years building a $3.7bn copper smelter in the area. Completed in 2024, the facility can produce up to 700,000 tonnes of copper cathodes per year and accounts for the majority of investment in the SEZ.
Both Gresik SEZ and Sei Mangkei SEZ have been successful in attracting investment geared toward downstream industrial processing of commodities sourced in the region or the country.
Newer SEZs are breaking from this pattern, with a proliferation of Chinese-backed projects focused on more technology-intensive manufacturing. The Subang Smartpolitan project is currently under construction in West Java, a few hours’ drive from Jakarta. Visible from the Trans-Java highway that passes through the area, Subang is slated to be one of Indonesia’s first EV production hubs. China’s BYD has invested around $1bn and plans to produce 150,000 EVs annually at the site with production expected to start in 2026.
In Central Java, the Kendal SEZ attracted Rp87tn as of end of 2024, much of it from Chinese battery and electronics firms, while in nearby Batang an upcoming SEZ has already garnered the interest of Chinese investors. SEZs focused on digital services are likewise seeing success. Nongsa Digital Park in Batam was designated an SEZ to take advantage of its proximity to Singapore, and has quickly filled up with data centres, digital education campuses and a film studio. In response to high demand, the SEZ is now being expanded.
Tourism-focused SEZs have been less successful, often falling short of investment targets. The Mandalika SEZ, located across the Lombok Strait from Bali, was established to attract investment in high-end hotels and relieve overtourism in Bali. The state-owned developer overseeing the project built the country’s first MotoGP racing circuit to make the area more attractive to tourists. As of 2024, only Rp5.8tn in investment had materialized in a handful of hotels, far below what was envisioned. A similar story has played out in tourism SEZs across the archipelago.
Despite reforms leading to a recent surge in investment, Indonesia’s SEZ strategy remains uneven in its outcomes. A handful of well-located zones tied to major industrial projects, ports or digital infrastructure have attracted significant investment, while others struggle to generate interest. Indonesia has responded to intensifying competition from Vietnam and Johor in Malaysia with its own SEZ vision, but success hinges on a more even distribution of investment and employment as the whole programme gathers speed.
Fonte: FDI Intelligence | Foto: Pixabay
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