Special Economic Zones (SEZs) as an engine of growth for local economies in Indonesia

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The government has continued to strengthen the role of Special Economic Zones (KEKs) as engines of growth for the local economy, and their economic effectiveness has gradually emerged.The Economic Coordination Minister said that the economic performance of the regions where well-managed KEKs are located is outstanding, such as Batang and Kendal districts, where the economic growth rate in the third quarter of 2025 amounted to 8.52% and 8.84% (year-on-year), respectively, which is much higher than the provincial and national averages.

KEK Industrial City in Batang CountyPromoted accelerated investment, employment growth and improved livelihoods. the county's economy grows 6.031 TP3T in 2024 and jumps to 8.521 TP3T in the third quarter of 2025, primarily driven by theHousehold consumption and investmentPull. Academic studies have shown thatBatang KEK has a significant multiplier effect on the local economyThe result is an increase in employment opportunities and a decrease in unemployment and poverty rates.

The poverty rate in 2025 is reduced to 7.791 TP3T from 8.731 TP3T in 2024.AdditionallyNew investment entry, technology adoption and development of high value-added processing industriesIncreased productivity and per capita output, and enhanced local economic competitiveness. Kendall County also performed strongly, withEconomy grows 8.84% in 3Q2025, tops in Central Java province, thanks to the industrial activities of the industrial zone and KEK.

He noted thatBatang and Kendall's experience shows that KEK not only incentivizes investment, but is a catalyst for local economic transformationThe successful model can serve as a reference for other regions (especially non-metropolitan areas). In the future, the Department of Economic Integration willCoordination of cross-sectoral and local government policiesBy means of theStrengthening connectivity, ensuring policy certainty, nurturing human resources and linking MSMEs to the local economyTo ensure that KEK is fully functional as aA key tool for accelerating investment, creating jobs and promoting balanced economic development throughout the countryThe

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