As many as fifteen Special Economic Zones (SEZs) that have been operating in the country have absorbed around 23,000 workers, Coordinating Minister for Economic Affairs AirlanggaHartarto has said.

“We already have nineteen SEZs and fifteen of them have been operating. The investment value worth Rp64.4 trillion. Of a total 150 companies, there are 23,000 workers with exports value of Rp3.8 trillion,” said Airlangga in his report at the groundbreaking for the construction of PT Freeport Indonesia’s smelter, in the Gresik SEZ, Gresik regency, East Java province, Tuesday (12/10).

Currently, investment commitments in the nineteen SEZs have grown to Rp92.9 trillion with the realization of investment by business actors reaching Rp54.6 trillion. The investment came from 167 business actors which had increased the number of jobs to 27,090 people, he added. Gresik SEZ itself, Airlangga continued, is one of four additional SEZs.

This SEZ was established on 28 June 2021 through Government Regulation (PP) Number 71 of 2021. This SEZ has a total land area of 2,167 hectares with a target investment value in the first five years of Rp71 trillion.

The main activities of this SEZ include the metal industry (smelters), electronics industry, chemical industry, energy industry and logistics. This SEZ is directly integrated with the sea port which has been widened and extended to 1,000 x 50 meters. This sea port will be equipped with several docks and several supporting facilities, and will be very significant in minimizing logistics costs.

“The port that was previously 500 x 30 meters has been extended to 1,000 x 50 meters. The 200,000 DWT (deadweight tonnage) ship can be unloaded here,” said Airlangga.

He said that the pier is planned to be deepened to 16 LWS (low water spring) to be able to serve loading and unloading of large ships. By doing so, the port in the Gresik SEZ has the potential to become a strategic hub in Indonesia.

According to ww.aseanbriefing.com ,The Indonesian government has pledged to make the SEZs a policy priority to attract foreign investment, boost industrial activity, and promote job creation – further facilitated through its tax incentive programs under the Ministry of Finance regulation No. 237/PMK.010/2020 (PMK 237).

These tax incentives include exemptions from income tax, value-added tax (VAT), import duties, sales tax on luxury goods, and excise duties.

The government has worked hard to diversify economic activity away from the island of Java, which contributes some 58 percent of the total Indonesian GDP and accounts for 60 percent of the country’s total population of 270 million. As such, only six SEZs are located on Java and the vast majority are in outlying regions like Sumatra and Sulawesi. The introduction of the latest tax incentives in late 2020 is seen as a timely one when the COVID-19 pandemic caused entities to reconsider the location of their production bases. In trying to capitalize on the recent global supply-chain readjustments, Indonesia also introduced the Job Creation Act, also known as the Omnibus Law, which aims to simplify business licensing, streamline corporate tax regulations, relax labor laws, and ease foreign investment restrictions. The government has noted that Indonesia’s strict labor laws are frequently cited as a disincentive to investors.

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