(Bloomberg) -- Indonesia's newest special economic zone expects to attract about $17 billion in investments after getting that status last week.
Java Integrated Industrial and Port Estate, known as JIIPE, in East Java has already brought in $3.5 billion from 16 tenants, said Haryanto Adikoesoemo, president director at PT AKR Corporindo, a key backer for the project. The area can now offer better ease of doing business after being named a special economic zone, which are open to foreign investors and come with a series of tax breaks.
The special economic zone incentives are part of President Joko Widodo's investment law overhaul last year, which sought to bring in funds and create jobs by simplifying rules and processes for businesses seeking to set up in the country.
“Indonesia is the largest archipelagic country in the world, unfortunately our infrastructure hasn't been developing as fast as our economic growth, resulting in higher logistics cost,” Adikoesoemo said in a Bloomberg Television interview on Monday. “This is our mission at JIIPE, first we would like to reduce the logistic cost.”
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The 3,000-hectare JIIPE is set to host East Java's only deep sea port, that is connected to an international airport and toll roads as well as a railway network. It's set to be home to PT Freeport Indonesia's smelter, which has already begun construction. So far, the 16 tenants are set to occupy 250 hectares out of the 1,800 hectares up for development, Adikoesoemo said.
AKR Corporindo holds a 60% stake in the project, with the rest held by state-owned port operator PT Pelabuhan Indonesia III.
“We believe we will be able to achieve the $17 billion” goal, he said, considering the additional 400 hectares of port area and 800 hectares of residential and commercial area still to be developed.
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