PALMOILMAGAZINE, JAKARTA – The Indonesian government has set an ambitious target of 8% economic growth over the next five years. This goal presents significant challenges amid current global uncertainties.
“On the other hand, we see great potential in Indonesia’s abundant natural resources, the growing manufacturing sector, and continuous technological innovation driving transformative changes,” said Minister of Industry Agus Gumiwang Kartasasmita during the National Strategic Project Support Working Meeting on Economic and Industrial Growth in Jakarta, Monday (2/12).
The Minister highlighted that as part of the Asta Cita mission, specifically point five, President Prabowo has committed to advancing downstream industries and developing resource-based industries to boost domestic value addition.
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“Achieving this will require substantial investment in the industrial sector, supported by a conducive investment climate and enhanced competitiveness in both industrial sectors and zones,” he said, as quoted by Palmoilmagazine.com from the Ministry of Industry’s website.
Key Role of Industrial Zones
The role of industrial zones is critical in meeting these goals. According to Law No. 3 of 2014 on Industry, all industrial activities must be located within designated industrial zones. “Industrial zones serve as the epicenter for enhancing industrial competitiveness and economic growth,” he added.
As the world’s largest archipelagic nation, Indonesia strives to distribute industrialization evenly across regions. By November 2024, 165 industrial zone companies had secured Industrial Zone Business Permits (IUKI) and were ready to operate.
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The total area of industrial zones spans 94,054 hectares, with 59.76% of the land occupied (either by tenants or infrastructure), leaving 40.24% or 37,631 hectares available for investment. Efforts to ensure equitable development of industrial zones are also being carried out through the National Medium-Term Development Plan (RPJMN) and National Strategic Projects (PSN), with 30 zones currently operational, mostly outside Java Island.
Investment Commitment and Environmental Policies
PSNs are strategic government or private projects aimed at promoting growth and equitable development. To date, six amendments have been made to the PSN project list under Coordinating Ministerial Regulation No. 7 of 2021, revised by Regulation No. 12 of 2024, encompassing 41 industrial zone projects.
“These 41 PSN industrial zones are expected to attract a total investment commitment of IDR 2,785 trillion, to be realized gradually,” Agus noted. As of 2024, the realized investment in PSN industrial zones is projected to reach IDR 68 trillion. Mid-term investment targets for 2029 are estimated at IDR 481 trillion.
Furthermore, the Minister emphasized the government’s focus on developing Environmentally Sustainable Industrial Zones. This aligns with Article 79 of Government Regulation No. 20 of 2024, which mandates sustainable practices in zone management, social and economic aspects, and environmental preservation.
“Achieving balance and sustainability between economic growth, industrial development, and environmental protection necessitates low-carbon industrial practices,” he said. A key effort is reducing greenhouse gas emissions, particularly carbon dioxide from fossil fuel combustion. This requires strong support from all industrial zone management companies to lower emissions and achieve net-zero targets by 2060.
Challenges and Coordination
Despite progress, significant challenges remain, including land issues, spatial planning, infrastructure, energy and water availability, governance, and skilled human resources. “With the President’s directive to operationalize all PSN projects by 2025, this is a monumental task for all stakeholders,” he remarked.
During the meeting, it was agreed that debottlenecking is essential to accelerate the operation of PSN industrial zones. Acting Director General of Industrial Resilience, Zones, and International Access at the Ministry of Industry, Eko S. A. Cahyanto, stressed the importance of inter-ministerial and inter-agency coordination to avoid overlapping programs and ensure a favorable investment climate.
He also called on stakeholders, including local and central governments and industrial zone managers, to collaborate in addressing challenges and streamlining PSN zone development.
“Let this working meeting serve as a positive momentum for transforming industrial zones, strengthening the manufacturing sector, and supporting Indonesia’s economic growth goals,” he concluded. (P3)
