Coordinating Minister Airlangga: Gresik SEZ Filled By Freeport Indonesia Is Expected To Be Able To Make A Positive Contribution To Exports

Coordinating Minister for Economic Affairs Airlangga Hartarto together with Indonesian President Joko Widodo (Jokowi), and SOE Minister Erick Thohir. (Photo: Doc. Coordinating Ministry for the Economy)

JAKARTA - In accelerating the distribution of economic development in Indonesia, the government has made various efforts, one of which is by building a Special Economic Zone (SEZ). Of the 15 SEZs that have been established, the commitment of business actors is Rp. 64.4 trillion and the realization of investment by business actors and business entities reaches Rp. 43 trillion.

In these 15 SEZs, there are a total of 150 companies and provide jobs for 22,279 workers. In addition, SEZ has succeeded in helping the growth of the export value of Rp. 3.8 trillion.

Currently in Indonesia there are 19 SEZs, of which the Gresik SEZ is one of the 4 additional SEZs. Currently, the investment commitment in 19 SEZs has grown to Rp92.9 trillion, with the realization of investment by business actors and business entities reaching Rp54.6 trillion.

The investment came from the addition of the number of business actors in the SEZ to 167 business actors, which has increased the number of employment opportunities to 27,090 people.

The Gresik SEZ located in East Java Province was established on June 28, 2021 through Government Regulation Number 71 of 2021. This SEZ has a total land area of 2,167 hectares with a target investment value in the first 5 years of IDR 71 trillion.

The main activities of the Gresik SEZ include the Metal Industry (Smelter), Electronic Industry, Chemical Industry, Energy Industry and Logistics. PT Freeport Indonesia (PTFI) is the anchor tenant of the Gresik SEZ with an investment in the construction of a smelter reaching Rp42 trillion with export and domestic off takers.

The capacity of the smelter being built will be able to process 1.7 million tons of copper concentrate per year, and this is the largest single line capacity in the world.

"This will of course make a positive contribution to the value of Indonesia's exports and import substitution," said Coordinating Minister for Economic Affairs Airlangga Hartarto in his report before President Joko Widodo at the Gresik SEZ Ground Breaking event which took place in Gresik Regency, East Java, Tuesday 12 October.

In addition, with the construction of smelters in the country, it will create jobs for as many as 40,000 people during the construction period until 2024. This is in line with the government's efforts to continue to encourage the development of the downstream copper industry so that it has added value for the country.

"With downstreaming, we want the process to have as much impact as possible, namely increasing added value, employment, and independence. For that we ask for support from the Minister of Industry, to immediately create downstream industries derived from smelters and Precious Metals Refinery so that there are off takers domestic industry," said Coordinating Minister Airlangga.

The obligation for downstream value-added copper is mandated by Law Number 3 of 2020 concerning Mineral and Coal Mining (Minerba Law). On the same occasion, President Joko Widodo said that Indonesia has enormous potential for copper reserves.

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"In the category of 7 countries that have the largest copper reserves in the world. This is what many of us don't know. We must use this enormous potential as well as possible, for the prosperity of the people by creating the highest added value for our economy. So don't let us have mines, we have concentrates, but the smelters, the downstream are in other countries. As the Minister said earlier, they are in Spain, Japan. The added value means those who enjoy them, "said President Joko Widodo.

The existence of PTFI itself is expected to be an attraction for the copper derivative industry and other industries to invest in the Gresik SEZ. But to be able to make it happen, of course it requires synergy and support from the relevant Ministries.

On that occasion, Coordinating Minister Airlangga asked for support related to facilities in the Gresik SEZ to the Ministers who were present.

"Minister of Energy and Mineral Resources, please support the provision of competitive water, electricity and gas in SEZ, Minister of SOEs to encourage SOEs (MIND ID as holding) to realize smelter and PMR investments in Gresik SEZ, Minister of PUPR to support the provision of clean water and toll road connectivity. Minister of Investment to support licensing and provide tax holiday incentives and tax allowances," said Coordinating Minister Airlangga.

"To the Minister of Transportation, please support the Gresik SEZ through the development of the port in the Gresik SEZ and rail connectivity," Airlangga added.