Indonesia’s Economic Transformation: The Impacts of Special Economic Zones (SEZs) to the Regional Economic Growth and Poverty Alleviation

Abstraksi

The implementation of SEZs (Special Economic Zones) in some provided locations in Indonesia aimed to act like a two-way conduit to link the global economic system to the national economies. It was expected to improve the regional economic growth and can absorb many workers to work in the zones at the same time. Through the foreign investment, Government incentive schemes aim to attract foreign investors to undertake manufacturing activities in some provided location of SEZs. Moreover, foreign capital flow in the zones facilitates the rapid influx of foreign investment, management experience, skills and technology that can be transferred to Indonesia’s industry. Also, Indonesia strategic location of the hub of international trade should be considered to develop more special economic zone that can stimulate the model of export-oriented industrialization (EOI) within the National economic development strategy. To succeed this, favoured treatment must be provided by the Government to the investors in the zones, for example, good infrastructure, import controls, industrial regulation and taxation. With those favoured treatments, the presence of SEZs ought to be used to obliterate every obstacle thought to be preventing investors from orienting production to an export-oriented focus. Also, investors wanted to have freedom from bureaucratic barriers and the elimination of the need to tie up the capital flow in customs duties.