CORE values industrial SEZ expansion as supporting downstreaming policy
These are Special Economic Zones (SEZs) that house industries or manufacturing plants linked to the government’s downstreaming policy, mineral processing and high-technology industries such as electronics, petrochemicals and electric vehicles (EVs).
Jakarta (ANTARA) — Mohammad Faisal, Executive Director of the Center of Reform on Economics (CORE) Indonesia, has assessed that the expansion of industry-based Special Economic Zones (KEK) supports the government’s downstreaming policy.
This follows three industry-based SEZs — Gresik, Kendal and Galang Batang — submitting requests for land expansion and zone development averaging twice their existing size, aimed at accommodating new investment demand.
“I think the expansion of these three SEZs is very good, if indeed it is to accommodate the surge in investment,” Faisal said when contacted in Jakarta on Saturday.
“Because looking at these three SEZs, they contain industries or manufacturing plants related to the government’s downstreaming policy, mineral processing and high-technology industries such as electronics, petrochemicals and EVs,” he added.
Faisal further noted that Gresik SEZ is closely tied to the metals/smelter, electronics, chemical and energy industries.
Meanwhile, Galang Batang SEZ focuses on mineral processing (bauxite) and its derivative products.
Likewise, Kendal SEZ is known as a centre for the development of export- and technology-based industries, including electric vehicles (EVs).
“So if there is indeed a need for land expansion because of increased investment in these industrial zones, that is certainly very good for driving our industrialisation,” Faisal said.
He added that manufacturing investment, by its nature, requires fairly extensive land.
Therefore, he continued, the expansion of the SEZs is expected to help expansion efforts and attract larger investments, including the facilities within them.
“Such as ease in export-import facilitation, which then means encouraging industries that are not only oriented towards the domestic market but also export markets,” Faisal said.
However, he reminded that the government needs to pay attention to the correlation between additional investment and the creation of quality jobs domestically.
Faisal argued that an indicator is needed as a benchmark to control the quality of investment, including among others an indicator of the number of domestic workers absorbed.
“So far, it has only been the investment value that has always been the indicator. Well, here there should also be the quality of the investment coming in, including how many jobs are created for the domestic population, as well as transfer of technology,” Faisal said.
“As well as the involvement of local economic or business actors in what is integrated with the manufacturing industry of that new investment,” he added.