Free Trade Zones

Indonesian Jokowi approves two special economic zones in Batam, Southeast Asia


SINGAPORE – Indonesian President Joko Widodo has officially granted Special Economic Zone (SEZ) status to a technology park and aircraft maintenance facility in Batam to kick-start economic recovery there amid the Covid-19 pandemic.

Nongsa Digital Park, located at the high-end northeastern tip of the island, is said to focus on digital technology and tourism activities. Batam Aero Technic, the Lion Air Group facility, would be dedicated to the maintenance, repair and overhaul of passenger aircraft.

The 166.45 ha park is expected to generate investments worth 16 trillion rupees (S $ 1.49 billion) and create 16,500 jobs, while the 30 ha aeronautical facility is expected to generate 7.2 trillion dollars. investment rupees and create 9,976 jobs.

The announcement was made by Minister Coordinator of Economic Affairs Airlangga Hartarto after a working visit to Batam last Saturday (June 12).

“The main objective of the development of the SEZ is to improve the economic growth, equitable development and competitiveness of the nation,” he said in a statement. “The SEZs in this region can be a pilot project and a beacon for the digital economy in Indonesia.”

The pandemic had a deadly impact on Southeast Asia’s largest economy as it plunged into its first recession in more than two decades in 2020. Many businesses have been forced to shut down and millions of people have been forced to shut down. lost their job.

Batam and the neighboring islands of Bintan and Karimun, located in the sprawling Riau Islands province, have been a free trade zone since 2009, but have seen stagnant growth and declining investment in recent years.

In 2017, Mr Widodo sought to boost the region’s development by designating SEZs that will benefit from a wider range of tax incentives such as tax breaks for businesses and tax breaks for workers.

The president, better known as Jokowi, also pledged to improve connectivity in the province and further explore trade cooperation with Singapore, a short ferry ride away.

Nongsa Digital Park opened in March 2018 following bilateral discussions to develop Batam as a digital bridge between Singapore and Indonesia. It has more than 100 technology companies, mainly based in Singapore, which employ more than 1,200 employees.

At the March 2 virtual launch of Nongsa D-Town, located in the park which will have amenities such as shops and cohabitation spaces, Singapore Economic Development Council Chairman Beh Swan Gin said, “For Singapore, with Nongsa, we can accelerate the faster growth of our technology sector because we have a limited workforce and resources, and the ability to harness the energy and talents of the young workforce. Indonesian work is wonderful. “

Mr. Airlangga envisioned the park as an entry point for global IT companies, as well as a center for the development of a young, knowledgeable IT workforce.

“Digitization is the one and only way to accelerate the economy, to accelerate it and not just to move it linearly. I hope that this SEZ can be the main showcase of the Indonesian economy and make our country comparable to developed countries, ”he added.

Nongsa Digital Park Senior Executive Director Marco Bardelli said most of the SEZ provisions are aimed at supporting the park’s digital economy ecosystem of businesses, talent, new entrepreneurs, educational and infrastructure activities.

“From the best regulations for forming a start-up to the attractive incentives for big investments in infrastructure such as data centers, we’ve got it all,” he told the Straits Times.

For Batam Aero Technic, Mr. Airlangga said that several new maintenance hangars, component workshops and tool and equipment workshops will be built.

Lion Air spokesperson Danang Mandala Prihantoro said the ZES status would help further enhance and optimize the capabilities of the current facility so that it can “seize the opportunities in the Asia-Pacific market“.

He added: “Our main hope is to develop integrated aircraft maintenance (installation) to reduce the number of services currently performed abroad.