Government Accelerates Industrial Downstreaming in Special Economic Zones, Targets Major Investment and Job Creation
By: Rivka Mayangsari )*
The government continues to accelerate the development of industrial downstreaming by strengthening Special Economic Zones (SEZs/KEK) as a new engine of national economic growth. This step is part of a broader strategy to encourage high value-added investment, expand employment opportunities, and strengthen the resilience of Indonesia’s strategic sectors. Through targeted and integrated policies, SEZs are positioned as acceleration spaces for the transformation of the national industrial structure toward a stronger, more self-reliant, and globally competitive economy.
The Ministry of Industry (Kemenperin) has reaffirmed its commitment to accelerating the development of thematic industrial zones aligned with national development priorities. Minister of Industry Agus Gumiwang Kartasasmita stated that going forward, industrial zone development will no longer merely pursue economic growth, but will also be directed at strengthening national resilience. In this context, thematic industrial zones will be projected as National Strategic Projects (PSN) or Special Economic Zones, depending on regional characteristics and long-term development needs.
Agus explained that strengthening energy security and food security has become a key focus of industrial zone development policy. Through downstreaming, raw materials are no longer exported in unprocessed form, but are instead processed domestically, creating added value, expanding employment opportunities, and reducing dependence on imported products. This approach is believed to strengthen the national economic foundation amid increasingly complex and uncertain global dynamics.
In addition to the energy and food sectors, industrial zone development is also directed to support the implementation of the government’s Asta Cita, particularly the fifth Asta Cita, which emphasizes the importance of high-quality, equitable, and inclusive healthcare services. In the industrial context, this policy is translated into efforts to strengthen national health sector self-reliance, including the pharmaceutical, medical device, and biotechnology industries. Accordingly, SEZs are expected to become centers for the growth of health-related industries that can meet domestic demand while also being export-oriented.
In line with this, the National Council of Special Economic Zones (DN KEK) has recorded a positive response from global investors regarding plans to designate six new SEZs in 2026. Acting Secretary General of DN KEK, Rizal Edwin Manansang, revealed that investors from China, Japan, and Europe have expressed serious interest and submitted business plans to invest in these zones. This interest reflects international business confidence in Indonesia’s investment climate and industrial policy direction.
The six new SEZs will be located across Java, Kalimantan, and Sulawesi, with diverse sectoral focuses, particularly on natural resource downstreaming and advanced technology development. Rizal explained that investors are attracted not only by resource potential and the domestic market, but also by the government’s readiness to provide infrastructure, regulatory certainty, and sustainable policy support. Infrastructure development within SEZs by zone developers is expected to generate significant multiplier effects for regional economies.
Furthermore, Rizal emphasized that SEZs possess a number of strategic advantages that make them highly competitive compared to industrial zones in other countries. These advantages include fast and efficient one-stop integrated licensing services, strengthened basic infrastructure, cross-sector regulatory alignment, flexibility in business activities, and the provision of attractive fiscal and non-fiscal incentives. This combination of policies is designed to reduce investment costs and enhance business certainty for industry players.
The government is also targeting SEZ development to absorb large numbers of workers, particularly from local communities. With the inflow of new investments in downstreaming and technology sectors, the jobs created are not only labor-intensive, but also provide opportunities to improve human resource quality through technology transfer and skills enhancement. This aligns with the vision of inclusive and sustainable industrial development.
At the regional level, the presence of SEZs is expected to serve as a catalyst for regional economic transformation. Industrial activities integrated with local supply chains will encourage the growth of small and medium enterprises, increase community income, and accelerate more equitable regional development. As such, the benefits of downstreaming are expected to extend beyond major industrial centers to surrounding and supporting regions.
Overall, the acceleration of industrial downstreaming through SEZs reflects the government’s seriousness in building a resilient, self-reliant, and future-oriented national economy. With consistent policy support, inter-ministerial synergy, and active participation from global investors, SEZs are expected to become a key pillar in driving major investment and job creation, while strengthening Indonesia’s position in the global industrial and trade landscape.
Going forward, the government has ensured that SEZ development will continue to be closely monitored through strengthened governance, investment oversight, and periodic evaluations to ensure that all downstreaming targets are achieved optimally. Synergy between the central government, regional governments, zone developers, and business actors will be crucial to ensure that SEZs truly function as centers of high value-added industrial growth. Through measured and sustainable steps, SEZs are expected to accelerate national economic transformation, expand quality employment opportunities, and reinforce Indonesia’s industrial self-reliance in facing global competition.
)* The author is a social affairs observer.*
