Indonesian Government Considers Seven New Special Economic Zones

Aug 2024

The Indonesian government has been presented with proposals to create seven new special economic zones (SEZs), as stated by the acting secretary general of the SEZ National Council. These proposed SEZs are intended for locations in Java, Sulawesi, and the Nusantara Capital City (IKN) in East Kalimantan.

At a media gathering held last July, the acting secretary general indicated that the special economic zone in Nusantara would concentrate on supplying energy to the new capital city and acting as a center for mining activities. He also confirmed that the seven proposed SEZs attract significant interest from domestic and international investors.

From 2012 through the end of June, SEZ investment totaled IDR 205.2 trillion (USD 12.6 billion) and created 132,227 jobs. In the first half of 2024, investments amounted to IDR 31.4 trillion (USD 2.01 billion), representing 40% of the annual target of IDR 78.1 trillion (USD 5.02 billion). During the same period, 15,229 jobs were generated, which is 39% of the target of 38,953 workers.

The government plans to offer fiscal incentives to investors in SEZs nationwide, which include streamlined permit access and tax exemptions for up to 20 years. Non-fiscal benefits, such as allowing 100% foreign ownership, will also be provided. Additionally, the government is enhancing the One Map Policy to expedite the development of SEZs and national strategic projects.

Additional fiscal incentives for SEZs include tax holidays, tax allowances, exemptions from value-added tax and luxury goods sales tax, suspensions of import duties, import tax exemptions, excise exemptions on raw materials, regional tax exemptions, and eligibility for VAT refunds related to the tourism industry. These measures are anticipated to attract foreign investors to develop the SEZs and potentially enhance the local economy.

(Source: The Star; and Invest Indonesia)

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