Jakarta, CNN Indonesia —
President Jokowi designate the Bumi Serpong Damai area (BSD) in Tangerang Regency, Banten to be Special Economic Zone (KEK) in the fields of education, technology and international health.
The determination is contained in Government Regulation Number 38 of 2024 concerning the Banten International Education, Technology and Health Special Economic Zone. The regulation was signed by Jokowi and will come into effect on October 7 2024.
In explaining this regulation, Jokowi said that the aim of BSD being designated as a KEK was to accelerate job creation and economic development in the Tangerang Regency area, Banten Province and to support the acceleration and expansion of national economic development.
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KEK BSD has an area of 59.68 hectares consisting of:
a. The eastern area covers an area of 28.83 hectares which is located in Cisauk District, Tangerang Regency, Banten Province; And
b. The western area covers an area of 30.85 hectares located in Pagedangan District, Tangerang Regency, Banten Province.
The determination was made after Jokowi also designated BSD as a National Strategic Project (PSN). This decision was announced by the Coordinating Minister for Economic Affairs, Airlangga Hartarto, after a meeting with Jokowi at the Presidential Palace, last March.
BSD City is known to be managed by PT Bumi Serpong Damai Tbk (BSDE) which is under the Sinar Mas Group. Sinar Mas boss Franky Oesman Widjaja is known to be an investor in the Indonesian Capital City (IKN).
He is part of the Nusantara Consortium which is working on the Nusantara Hotel in the new capital city. Jokowi also thanked Franky and other entrepreneurs who were members of the consortium during the groundbreaking of Hotel Nusantara in September 2023.
So, is it right for BSD to be designated as a KEK and is it true that PSN has something to do with Jokowi’s return of favor to Franky for wanting to become an investor in IKN?
UPN Veteran Jakarta Public Policy Expert and Economist Achmad Nur Hidayat believes that the designation of BSD as a KEK and PSN is inappropriate.
The reason is, BSD has become a developed area with adequate infrastructure and modern facilities, and has access to the airport.
He questioned why an already developed area was designated as a SEZ. In fact, many other regions in Indonesia need more incentives to attract investment so that their economy advances and develops.
“This can be considered a form of injustice in the allocation of resources and facilities, where developed areas again get privileges, leaving behind disadvantaged areas which actually need more attention,” he told CNNIndonesia.com.
BSD, he continued, has great potential with its strategic geographical location, namely close to Jakarta and Soekarno Hatta International Airport. Not to mention its modern infrastructure makes BSD an attractive area for various sectors, including technology, education and health.
However, this potential existed even before the establishment of KEK. In other words he said; Jokowi’s move to designate BSD as a KEK may only strengthen the development monopoly in the area, without having a significant impact on equitable development.
Achmad said KEK was basically designed to encourage economic development in areas that were still underdeveloped or had potential but had not been maximized.
As a SEZ and PSN, BSD will enjoy various benefits, including fiscal incentives such as tax reductions, reduced import duties and ease of licensing.
However, BSD is said to have developed rapidly without additional incentives from the government.
“Incentives like this will actually widen the gap between developed areas such as BSD and areas that are still underdeveloped, which need more government support to encourage local economic growth,” he said.
Achmad said that the designation of BSD as a KEK managed by PT Surya Inter Wisesa, a subsidiary of PT Bumi Serpong Damai (BSDE), which is also part of the Sinarmas Group, could give rise to speculation that there is a connection with business interests in the IKN project.
Even though the government has argued that the KEK designation in BSD is based on the area’s potential in the education, technology and health sectors, Achmad said it was difficult to ignore the potential conflict of interest.
“The Sinarmas Group is known to have involvement in IKN, and this determination can be seen as a form of ‘reward’ or support for large companies that have connections to the government. This gives the impression that the establishment of KEK in BSD is based more on business-political relations than national economic urgency ,” he added.
If we look at various other regions in Indonesia, especially outside Java, Achmad said there are still many areas that need government support to encourage economic growth.
These areas are often hampered by inadequate infrastructure, difficult access, and a lack of trained human resources.
He gave the example of eastern Indonesia, such as East Nusa Tenggara or Maluku. Even though it has great tourism potential and natural resources, it is often neglected in national development policies.
“Areas like this are more deserving of SEZ status so they can spur economic growth in underdeveloped areas and improve the welfare of people throughout Indonesia,” he said.
What makes BSD’s designation as a SEZ even more suspicious, continued Achmad, is the timing of the designation, which was only 11 days before Jokowi stepped down as president.
He questioned whether this decision was an attempt to accelerate a certain agenda or whether there was perhaps encouragement from interested parties behind the scenes.
“Strategic decisions of this kind usually require time and in-depth evaluation, so that a sudden determination at the end of the term of office looks strange and lacks transparency. This determination can be seen as a step to secure the interests of certain parties before a change of government occurs. In this context, Jokowi’s decision gives rise to “suspicion that there are other pressing interests, especially because the Sinarmas Group, which has a large involvement in the IKN project, is also part of the company involved in the development of BSD,” he added.
Meanwhile, Economic Director of the Center of Economic and Law Studies (Celios) Nailul Huda said that of course with an integrated area, BSD could actually be developed into a pretty good industrial center.
He believes that BSD is quite suitable as a center for developing KEK for certain industries, especially for high-tech and health industries.
“But I don’t agree with becoming a PSN because BSD has developed enough without having to join the PSN,” he said.
He suspects there is an ulterior motive behind Bali’s designation of BSD as a KEK and PSN.
The convenience facilitated in KEK and PSN is said to be an attraction for developers. Facilities such as government guarantees and settlement of legal cases including land disputes will be guaranteed by the government.
It is not uncommon for cases of land violations to occur in PSNs and KEKs such as on Rempang Island.
“On that basis, I also suspect that granting KEK status to BSD is the government’s return for Sinarmas’ investment in IKN. Sinarmas has invested in IKN, and they certainly want a return in the form of government policy for the establishment of KEK,” he added.
On the other hand, Nailul also noted that there were potential legal defects in granting KEK status to BSD. Until now, he said, it is still unclear whether BSD share owners are Indonesian citizens (WNI) or foreign citizens (WNA).
“If it is proven that they are foreigners, the BSD KEK status can be cancelled,” he added.
[Gambas:Video CNN]
