Special Economic Zones In Batam Absorb IDR 7.29 Trillion Investment, Coordinating Minister Airlangga: Can Save Foreign Exchange Up To IDR 26 Trillion Per Year

Coordinating Minister for the Economy Airlangga Hartarto while visiting the Batam Aero Technic SEZ. (Photo: Doc. Coordinating Ministry for the Economy)

JAKARTA - In an effort to develop Special Economic Zones (SEZs) in Indonesia, the Government emphasizes the establishment of SEZs that focus on accelerating regional economic growth, as well as encouraging SEZs to be able to build added value for mastery of technology and human resources. This is primarily aimed at encouraging economic growth, equitable development, and increasing competitiveness.

Coordinating Minister for Economic Affairs Airlangga Hartarto during a series of working visits to Batam, Wednesday 27 April, had the opportunity to visit the Batam Aero Technic (BAT) SEZ and Nongsa Digital Park (NDP) SEZ. The visit was not only to directly observe development progress since the stipulation of the two locations as Special Economic Zones, but also to encourage investment acceleration.

The first visit was made by Coordinating Minister Airlangga to the BAT SEZ, which operates as a SEZ based on Government Regulation No. 67 of 2021 and focuses on industrial activities based on Aircraft Maintenance, Repair, and Overhaul (MRO) and logistics.

"We reviewed the SEZ related to MRO, compared to the visit in June 2021, now there has been progress, especially from the construction of the new hangar, and it can also be seen that the maintenance capacity has increased. Of course, what is important is the increase in the number of workers to 3,000 people, consisting of 1,500 engineers/engineering graduates, and the rest are technicians or mechanics," said Coordinating Minister Airlangga.

From the area of the SEZ BAT of 30 hectares, it will be built in 4 stages, meanwhile the investment that will enter until 2030 is targeted at Rp. realized as many as 1,474 people until April 2022.

"In addition, if the MRO industry is achieving its investment target, it is based on the number of aircraft that are being repaired and currently it appears that its capacity has increased and is capable of handling 44 aircraft at the same time," said Coordinating Minister Airlangga.

Coordinating Minister Airlangga also explained, with the construction of the BAT, it is estimated that it will save 65 percent - 70 percent of foreign exchange from the MRO needs of national airlines worth Rp26 trillion/year which has been flowing abroad.

"In the medium term, it is expected to be able to seize opportunities from the Asia Pacific market which has around 12,000 aircraft units, and a business value of around 100 billion US dollars by 2025. Costs will compete with neighboring countries, with large air traffic, with Batam's strategic location," explained the Coordinating Minister for Airlangga.

The visit was then continued to the NDP SEZ which has an area of 166.45 hectares and operates as a SEZ through Government Regulation No. 68 of 2021 and was developed for various activities which include Research, Digital Economy, and Technology Development as well as Tourism, Education, and Creative Industries.

The total investment target for this SEZ is Rp. 39 trillion, which consists of investment in regional development of Rp. 1.3 trillion and investment by business actors of Rp. 37.7 trillion. Meanwhile, the target for employment is 16,500 people in 2040, and has been successfully realized up to 1,070 people by the end of 2021.

"Here, we see the progress of the animation industry, and since the SEZ status was granted in June 2021, it has been seen that there are 11 Data Center companies that are committed to investing around Rp. 14 trillion, and their electricity needs are above 125 MW. The government will continue to encourage NDP to realize its investment in the near future. The investment target in NDP is around Rp. 60 trillion, but only Rp. 40 trillion has been managed, so we will see gradually between Rp. 40 to Rp. 60 trillion," said Coordinating Minister Airlangga.

On this occasion, Coordinating Minister Airlangga was also informed about the development of digital talent education at the NDP KEK in collaboration with several partners in the field of education, including the Royal Melbourne Institute of Technology (RMIT) University Australia for the Cyber Security course, Amazon Web Services (AWS) for cloud data management, and finally with Epic Games to conduct training for trainers using the Unreal Engine platform.

Mike Wiluan as CEO of Nongsa Digital Park, on the same occasion, hopes to develop human resources, especially in the IT sector so that the NDP SEZ can later contribute to IT efforts to the national economy. In addition, Mike also added Infinite Studio's plan to build a virtual studio.

According to Coordinating Minister Airlangga, the NDP SEZ can act as an entry point for international IT companies, both from Singapore and other countries, as well as become an IT Hub for Indonesia's Digital Bridge to Singapore and internationally. In addition, the NDP SEZ is also a center for developing Indonesian digital young human resources who can later play a major role in the national economy by becoming a technopreneur.

"The presence of the NDP KEK is estimated to be able to save the country's foreign exchange in the digital business of up to Rp20-Rp30 trillion per year with the largest contribution from the data center and international education sectors," said Coordinating Minister Airlangga.

Also accompanying the Coordinating Minister for the Economy on the visit were the Minister of Industry, Minister of PPN/Head of Bappenas, Members of the DPR, Governor of Riau Islands, Mayor of Batam/Head of BP Batam, and Plt. Secretary General of the SEZ National Council.