Indonesia offers a favorable environment for investment - with different regions offering business-friendly policies and investment incentives. However, which regions offer optimal conditions for different industries?
With 17000 islands varying in quality, reliability and availability of logistics, infrastructure, and utility services, we discuss the potential hot spots for foreign investors when choosing where to invest in Indonesia.
Overview of Indonesia’s key economic regions
For foreign investors, entering Indonesia’s special economic zones (SEZ) and taking full advantage of what they offer requires a long-term outlook. Companies must first ensure their industry is suited to the infrastructure and benefits afforded in the SEZs and understand the long-term domestic and regional policies that could impact their industry.
Indonesia’s government has made the development of the country’s special economic zones (SEZ) a priority policy with the aim of attracting over US$50 billion in foreign investment over the next decade, particularly for SEZ-oriented manufacturing.
Within an SEZ, the following business activities can be undertaken:
- Production and processing;
- Logistics and distribution;
- Research, digital economy, and technology development;
- Tourism;
- Energy development;
- Education;
- Healthcare;
- Sports;
- Financial services;
- Creative industries;
- SEZ development and management; and
- Procurement of SEZ infrastructure.
Investors operating in Indonesia’s SEZs will find they are supported by well-integrated infrastructure from highways, drainage systems, high-speed internet and communication systems, ports, and airports.
Moreover, the Indonesian government has prepared an array of fiscal and non-fiscal incentives, such as easier immigration process, corporate income tax reductions, exemptions on import duties and excise duties, among many others.
For foreign investors, entering Indonesia’s special economic zones and taking full advantage of what they offer requires a long-term outlook. Companies must first ensure their industry is suited to the infrastructure and benefits afforded in the SEZs, as well as understand the long-term domestic and regional policies that could impact their industry.
