Everything you need to know about industrial investments in Indonesia’s special economic zones

Find out which locations offer the best investment opportunities for industrial estates.

According to Colliers, industrial estates in Indonesia are currently centred on the west part of Java island. 

Rivan Munansa, Head of Industrial & Logistics Services Colliers Indonesia, says investing in Java appears to have great potential and special economic zones (SEZs) are located in various provinces to encourage regional development and economic growth and improve Indonesia’s investment climate.

Here’s more from Colliers:

Some of the reasons SEZs have good potential include:

• Incentives for investors: The existence of incentives provided by government for investors is an advantage. Incentives provided are attractive, aiming to encourage and create a favourable investment climate, especially for foreign investors. Licencing issues are one of the challenge that many investors often face. However, in SEZs, the ease of licencing is one of the key incentives, and has become government priority.
• Investment opportunities for tenants and investors: SEZs, which are currently operating or under construction, involve various business activities, ranging from heavy to light industry. Due to the geo-strategic SEZ concept, industrial areas in SEZ have access to wider global markets and ports and airports are expected to be able to increase productivity and ensure wider distribution for industries.

Locations

Up until 2022, based on data from the National Council for Special Economic Zones of the Republic of Indonesia, there were 18 SEZs in Indonesia. 

SEZ locations which appear to offer the best investment opportunities for industrial estates:

• for the automotive, metal, industries, SEZs located on the island of Java are still the most preferred location;
• in addition, SEZs involving activities such as energy, petrochemical and chemical are usually located on the islands of Sumatra and Java;
• for business activities such as logistics, these are mostly found in SEZs in Java, Sumatra, Sulawesi, Kalimantan to Papua.

Are SEZ benefits attractive enough?

It appears that some of the private industrial estates are starting to apply to become SEZs. Local governments also see great potential by offering opportunities for investors to manage industrial estates in their area.

The incentives offered, easier licencing processes, more transparent taxes, well co-ordinated spatial planning and management, as well as integrated infrastructural support, are expected to create higher potential and values for industrial estates in SEZs.

If the business activities being undertaken fall under the criteria for the intended SEZ, then the opportunity for carrying out business strategies and product distribution, especially if these activities are related to exports and imports, is good.

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