The government is targeting a special economic zone (SEZ) in Galang Bintang, Riau Islands to be completed in 2027 - Photo by Coordinating Ministry for Economic Affairs Office

JAKARTA (TheInsiderStories) – The government is targeting a special economic zone (SEZ) in Galang Bintang, Riau Islands to be completed in 2027 with a total investment of Rp36 trillion (US$2.57 billion), officials said today (01/30). The 2,333.6 hectares zone is managed by PT Bintan Alumina Indonesia (BAI) and expected to become a major production center for aluminum and its downstream products.

Airlangga Hartarto, country’ economic coordinating minister, who visited the area Thursday, explained the zone is currently undergoing construction of an alumina refinery facility with a production capacity of 2 million tons per year. Then, by the end of 2020, it is targeted to be realized in stages by 1 million tons per year with development progress approximately 62.5 percent now. The total investment for the construction reaches Rp9 trillion.

The minister added, in the second phase (2022-2027), an aluminum smelter will be built in stages that will produce 1 million tons per year and an 18 x 150 MW power plant. The development is targeted to begin in 2022 after the refinery is operating at full capacity.

“If the zone is fully operation, the industry will process bauxite ore into alumina powder, and then be processed into aluminum ingots,” he explained.

The government expected the zone to become a major production center for alumina (2 million tons per year), aluminum ingot (1 million tons per year), electricity (2,850 MW), and other supporting facilities. The alumina capacity will contribute Rp7.5 trillion to national production in 2021 and if added to the aluminum ingot capacity will contribute Rp14 trillion to national production in 2027, according to Hartarto.

The minister added that the economic zone would lift economic activity in the region through the employment of over 23,300 workers. In turn, the minister urged the local community to support the zone by supplying it with the necessary skilled workers and supporting businesses such as food and accommodation.

Last year, the zone secured Rp5.6 trillion worth of investment from the zone’s advocate, aluminum producer PT Bintan Alumina Indonesia. The investment includes Rp951 billion for a seaport, Rp1.65 trillion for an aluminum refinery, Rp196 billion for a dam and Rp1.93 trillion for a power plant.

The government has attracted investors using a series of fiscal and nonfiscal incentives exclusive to the economic zone. Bintan Alumina Indonesia director Santoni said he hoped the investment in the economic zone will increase to $5 billion over the next 10 years. Meanwhile, construction is ongoing for three other special economic zones – Arun Lhokseumawe, Bitung, and Morotai – slated to begin operations this year.

US$1=Rp14,000

Written by Lexy Nantu, Email: lexy@theinsiderstories.com