Special Economic Zone

The Indonesian government intends to use special economic zones (SEZs) as growth engines for regional economic development. Currently, the government has recognized eight SEZs in Indonesia, representing economic activities across sectors, including eco-tourism - based zones. According to the National Council on Special Economic Zones (Dewan Nasional Kawasan Ekonomi Khusus/DN KEK) the number of recognized SEZs should increase to 15 by 2016, and increasing to 40 in the next 4 years. From a green growth perspective, SEZs are potential innovation zones, where government and business can experiment with policy instruments and regulatory mechanisms to drive traditional economic growth targets like exports and employment creation while maximizing economic benefits from cost internalization and sustainable use of natural capital and ecosystem services. The development of Green SEZs or Low-Carbon SEZs would pilot innovative mechanisms, which could trigger green growth-oriented reforms across the wider economy. For example, green SEZs could promote and pilot activities such as renewable energy, energy-efficient building systems, sustainable palm oil development, integrated waste management, ecotourism and rehabilitation of forest and marine ecosystems. GGGI works with the Coordinating Ministry of Economic Affairs (Kemenko Perekonomian) and DN KEK to develop an integrated framework of policy guidelines and instruments that will link macro-level fiscal and investment policies towards SEZs, ultimately leading to investment plans and bankable projects in SEZs, which triggers inclusive resource efficient and environmental sustainable growth.