The Role of Special Economic Zones in Promoting Development in West Papua

For the past couple of years, the Indonesian government has been focusing on creating a rapid development in West Papua. Infrastructures like roads, highways, and railways have been built to provide a solution to better economic activity in the area.

One of the approach to stimulate the economic growth is by constructing a Special Economic Zone (SEZ) or often called as Kawasan Ekonomi Khusus (KEK) in Indonesian. Since 2015, the Badan Koordinasi Penanaman Modal (BKPM) or the investment coordinating board of Indonesia had been making a plan for four SEZ in West Papua. The areas which are assigned to the SEZ construction are Sorong, Merauke, Raja Ampat, and Teluk Bintuni.

What is Special Economic Zone?

Special Economic Zone or SEZ is an integrated area with certain facilities and infrastructure to support the economic growth in the area. It also plays a part in promoting the area to investors. The infrastructures may involve manufactory buildings, production land, residence, and commercial centers.

The integrated area would also be equipped with transportation systems such as railways, airports, highways, or harbors. Indonesia has been developing these zones in various areas on its main islands. Each of the special zones also has different business section depending on the industry potential of the area.

The existence of these SEZ is expected to boost the economic activity as well as creating adequate employment for the local people. Automatically, the areas around the zone will receive positive impacts and will eventually stimulate the growth of small and medium enterprises, too.

SEZ Sorong, One of the First SEZ in West Papua

Currently, SEZ Sorong is one of the four SEZ in West Papua. The zone is an ongoing project which is expected to be launched as early as 2019. As one of the big cities in West Papua, Sorong has a geo-economic and geo-strategically characteristic as it lies on the tip of the bird’s head in West Papua.

With an area of more than 500 hectares, the SEZ Sorong will handle the marine industry because it borders directly with the sea. It will also be one of the import centers on West Papua. Currently, the government is planning to extend the runway of Sorong’s airport and integrate it with national roads and highways.

More to Come, SEZ in West Papua

Continuing the development of SEZ Sorong, the government along with BKPM is also preparing another SEZ in Merauke, Teluk Bintuni, and Raja Ampat. With different potential, these zones are expected to promote an all-around development in West Papua.

Each of the zones handles different sectors. For example, SEZ Raja Ampat will focus on the tourism sector. The infrastructure will involve resorts, roads, and transportation system. On the other side of the island, SEZ Merauke will be developed to handle farming sector and its products manufacture.

Another SEZ will be built in Teluk Bintuni which will be the center for smelter and petrochemical industries and its processed products. By focusing each sector into an integrated SEZ, the economic activities will be more efficient and well-organized.

According to the BKPM, the investors were already interested in investing in the areas. This means it would only be a couple of years before West Papua’s development is in peer as other big cities in Indonesia.

Developing Papua through Investors, What Are the Advantages?

Though to some people attracting foreign investors to West Papua could bring negative impacts of what they called as modern colonialism, the fact tells otherwise. As a developing country, Indonesia may still have limited fund to develop its industries locally.

By working with foreign investors, there are many advantages that will bring a positive impact on the growth of local economy such as:

  1. Natural resources can be processed effectively
  2. The business will open more employment opportunity for local people
  3. The area will be automatically developed in every aspect especially in technology
  4. Local labor will have the chance to learn new technology brought by the investors
  5. The investment will increase Indonesia’s foreign exchange income
  6. The area will be protected politically and geographically
  7. Increase national security from international disputes

Sometimes, foreign investment also means a tighter market competition. It should eventually stimulate the local industry to learn and compete with the foreign industry.

However, it does not rule out the possibility that the SEZ attracts not only the foreign investor but also local investors. Either way, the presence of SEZ will bring many benefits for the Indonesian industry and the mental development of the people in Indonesia.

Because every SEZ usually has its own residence and commercial area, the SEZ is not only addressed to industry, but it will also create an area of living. Most of the SEZ is equipped with an adequate waste system so it will be more nature-friendly than the conventional system of industry.

Through SEZ in West Papua, the development will promote rapid growth in some important aspects of human resource, natural resources, technology, and protection.