Three special economic zones seek expansion as investment grows

Three of Indonesia's special economic zones (SEZs) have applied to expand their land areas after attracting strong investor interest, a senior government official said, as the country seeks to accommodate more manufacturing and digital infrastructure projects.

The expansion requests come from Kendal SEZ in Central Java, Gresik SEZ in East Java and Galang Batang SEZ in the Riau Islands, Susiwijono Moegiarso, secretary at the Coordinating Ministry for Economic Affairs, said on Friday.

"They are applying for land expansions, and on average they are requesting to double their current size," Susiwijono said.

Indonesia has 25 special economic zones that offer tax incentives and other benefits to attract investment in sectors including manufacturing, logistics, tourism and digital services.

Susiwijono said the expansion requests reflected high occupancy rates at several zones and were intended to provide space for new investment.

Kendal SEZ, which hosts around 140 companies producing electronics, textiles, furniture and battery materials, has reached full occupancy despite covering only about 1,000 hectares, he said.

"With an area of only about 1,000 hectares, the SEZ is already fully occupied, and it has now requested an additional 1,000 hectares adjacent to the existing site," he said.

Galang Batang SEZ, home to a bauxite-to-alumina smelter, has requested an additional 2,700 hectares to accommodate downstream alumina processing, refining and additional smelting projects, he added.

Susiwijono did not disclose the size of the proposed expansion for Gresik SEZ.

He said data centres were emerging as one of the country's most promising investment opportunities, with about 10 operators already established in Nongsa Digital Park SEZ in Batam.

"Going forward, data centres will be needed everywhere. Therefore, we are also encouraging investors to consider other SEZ locations in addition to Nongsa," he said.

Editing by Reiner Simanjuntak