Identification of Regulatory Issues in Industrial Zones

The Ministry of Industry, through the Directorate General of Regional Resilience and National Industrial Access (Direktorat Jenderal Ketahanan Perwilayahan dan Akses Industri Nasional- “ KPAII ”), has identified a number of issues in the formulation of regulations governing industrial zones. The Director General of KPAII, Tri Supondy, stated that this initiative constitutes a follow-up to discussions held by the Working Committee (“ Panja ”) of Commission VII of Indonesia’s House of Representatives (“ DPR RI ”).

“The Ministry of Industry is currently identifying issues and formulating solutions related to industrial areas as part of efforts to strengthen the regulatory framework,” Tri stated.

Tri explained that there are three key directives from Panja for the improvement of industrial areas, namely regulatory reform, enhancement of incentive schemes to ensure parity with Special Economic Zones (“Kawasan Ekonomi Khusus- KEK ”), and prioritization of infrastructure and energy. He further noted that the current incentive framework has not yet been effective in increasing investment attractiveness or promoting equitable development across industrial areas.

Other challenges arise in relation to infrastructure, licensing, security, institutional arrangements, as well as preferential support for small-scale industries and surrounding communities. Not all industrial zones have secured guarantees of adequate supply and quality of electricity, raw water, and gas, nor sufficient transportation and logistics support. Basic corporate licensing processes and tenant approval procedures remain time-consuming, while not all industrial zones have been designated as National Vital Objects in the industrial sector.