Economy Minister Hatta Threatens to Nix Special Zone

By webadmin on 09:13 am Jul 25, 2012
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ID/Agustiyanti, Wahyu Sudoyo & Kunradus Aliandu

Coordinating Minister for the Economy Hatta Rajasa said on Monday that the government would annul the Sei Mankei Industrial Zone’s special economic status if local leaders could not solve an ongoing land problem.

The industrial zone, located in Simalungun, North Sumatra, provides 2,000 hectares for the development of sustainable palm oil. It is part of the government’s Master Plan for the Acceleration and Expansion of Economic Development (MP3EI), a massive Rp 4,000 trillion ($424 billion) project to support economic growth through infrastructure development.

The problem at Sei Mankei arose after the Simalungun district head refused to issue a permit for the special zone on the grounds that South Sumatra’s Regional House of Representatives (DPRD) had yet to pass the spatial master plan bylaw.

The province’s DPRD is scheduled to hold a plenary session next month to discuss the bylaw.

Hatta said he had called North Sumatra Interim Governor Gatot Pujo Nugroho and given him a one-month deadline to find a solution or else the central government would find another location for the industrial zone.

Such delays hamper confidence in Indonesia as a place to invest, Hatta said.

“Unilever wants to invest Rp 2 trillion in Sei Mankei, but they can’t even enter the location,” he said.

Other European companies were also planning to invest in Sei Mankei, the minister said.

State Enterprises Minister Dahlan Iskan said on Tuesday that the plan had been problematic since Day 1.

According to Dahlan, Sei Mankei was not the ideal location for a special economic zone because of its location far from sea.

“It is not that I disagree [with using Sei Mankei], but there is nothing wrong with trying to find a new location,” he said.

Sei Mankei’s special status was cemented by a government regulation issued in February. The regulation set out a 36-month deadline for developing the industrial zone.

Investors in special economic zones such as Sei Mankei receive incentives like tax breaks and lower import tariffs.