Gov’t Issues Government Regulations on Batam Aero Technic and Nongsa Digital Park SEZs

Coordinating Minister for the Economy Airlangga Hartarto during the handover of Government Regulations (PP) on Special Economic Zones in Batam, Friday (12/6). (Photo: PR of Coordinating Minister for the Economy)

The Government has issued two Government Regulations (PP) on Special Economic Zones (SEZ) located in Batam, namely PP Number 67 of 2021 on Batam Aero Technic SEZ and PP Number 68 of 2021 on Nongsa Digital Park SEZ.

The two PPs were signed by President of the Republic of Indonesia Joko Widodo on 8 June 2021.

SEZs are developed through the preparation of areas that have geoeconomic and geostrategic advantages and function to accommodate industrial activities, exports, imports, and other economic activities that have high economic value and international competitiveness. The SEZs is expected to build economic capability and competitiveness at the national level through value-added industries, tourism and value chains.

“The determination of these two SEZs is very strategic in supporting the development of the Batam, Bintan, and Karimun Regions which have now been developed into Free Trade Zones and have attracted both foreign and domestic investors. Action Plans for these two SEZs have also been prepared. I ask for the commitment of all relevant agencies to carry it out properly,” said Coordinating Minister for the Economy Airlangga Hartarto when handing over the PP Batam Aero Technic SEZ and Nongsa Digital Park SEZ, in Batam, Riau Islands, Saturday (12/6).

The determination of the two SEZs, which are followed by simultaneous vaccinations in the industrial areas in Riau Islands, is expected to be an accelerator of national economic recovery in the province.

Batam Aero Technic SEZ with an area of 30 hectares has an investment target of Rp7.2 trillion and will create jobs for 9,976 people. According to the regulation, this SEZ will be developed for MRO-based industrial activities (maintenance, repair, overhaul) of passenger aircraft.

The development of the Batam Aero Technic SEZ is expected to save foreign exchange by 65-70 percent of the MRO needs of national airlines that have been flowing abroad and seize opportunities from the Asia Pacific market which has around 12,000 aircraft units with a business value of USD100 billion in 2025.

Meanwhile, the Nongsa Digital Park SEZ with an area of 166.45 hectares has an investment target of Rp16 trillion and will create jobs for 16,500 people. This SEZ will be developed for IT-digital and tourism-based activities.

The Nongsa Digital Park SEZ is expected to be an entry point for global information technology business actors to the national economy, save foreign exchange in digital business up to Rp20-30 trillion per year and transfer technology in the IT sector so that it becomes a center for developing Indonesian young IT workforce.

After becoming an SEZ, the area will have Movie Town, IT Office, IT Academy, Data Center Commercial Area, as well as other facilities and infrastructure such as hotel and resort.

“The Riau Islands Province has the most SEZs in Indonesia. We have a digital hub from Batam to various areas that are connected to IT. SEZs in this region can be a pilot plan for the digital economy in Indonesia,” said Airlangga.

The SEZ management on Batam Island is expected to be able to immediately realize the regional development commitment and bring investment from business actors in accordance with the set targets or even faster. It is hoped that the investments can contribute optimally to the development goals of each region.

For this reason, the Government continues to encourage investment realization, especially for Data Centers, as an effort to improve and develop the digital economy. This development is projected to be able to accelerate the national economic recovery due to the COVID-19 pandemic.

“Digital is the only activity that can accelerate the economy. I hope these SEZs can be a prime example of the Indonesian economy and make our country equal to developed countries,” Airlangga said. (PR of Coordinating Ministry for Economic Affairs/UN) (EST/LW)