Fahmi Shahab – Industrial Park
Indonesia’s industrial clustering is often unfamiliar to the general public and foreign investors, leading to challenges in obtaining basic location and spatial planning permits, which can subsequently delay the issuance of other technical permits. This lack of clarity is compounded by the widespread conflation of terms such as Industrial Park and Industrial Zone. Many professionals and the public also mistakenly equate the Industrial Designation Area (KPI-Kawasan Peruntukan Industri) with an Industrial Zone (ZI-Zona Industri), hindering effective decision-making and investment planning.
A precise understanding of these terms is essential for policymakers, investors, and businesses navigating industrial development. Here’s a structured breakdown:
- Industrial Designation Area: Defined as a stretch of land designated for industrial activities based on the Regional Spatial Plan, determined by statutory regulations.
- Industrial Zone: Refers to a spontaneously developed area where industrial activities cluster without prior structured planning, either before or after the establishment of the regional spatial plan.
Regulatory Foundations
- Law No. 5 of 1984 on Industry – Article 20 does not recognize the term Industrial Zone. Instead, it refers to Industrial Growth Center Areas (WPPI-Wilayah Pusat Pertumbuhan Industri), which can later be developed into Industrial Parks.
- Government Regulation No. 47 of 1997 on the National Spatial Plan (RTRWN -Rencana Tata Ruang Wilayah Nasional) – Officially uses the term Industrial Designation Area rather than Industrial Zone.
- Regulatory Terminology – The term Industrial Zone is not legally recognized in formal laws and regulations. Instead, Industrial Designation Area is commonly used, although businesses and the general public are more familiar with the term Industrial Zone.
- The 1988 Industrial Zone Concept – On August 27, 1988, the Ministry of Industry introduced the term Industrial Zone in the context of its Industrial Growth Center Areas This concept, signed by the Coordinating Minister for Economy, Finance, and Industry & Development Supervision, and the Minister of Industry, defined Industrial Zones as:
“An area where industrial activities grow and develop, centered around key or basic industries that act as the prime mover of regional economic development, where industry serves as the leading sector for economic structural development.”
- West Java Government’s Interpretation – The West Java Government also introduced the term Industrial Zone, but its definition differs from the Ministry of Industry’s version. Instead, it aligns more closely with the concept of Industrial Designation Area.
The Emergence of Industrial Park Concept
The concept of Industrial Parks was officially introduced through Presidential Decree No. 53 of 1989, which defines an Industrial Park as: “A designated area for concentrated industrial processing activities, equipped with infrastructure, facilities, and other supporting amenities, provided and managed by an Industrial Park Company.”
With the issuance of Government Regulation No. 20 of 2024 on Industrial Zoning, this definition was refined to: “An Industrial Park is a designated area for concentrated industrial activities, equipped with supporting infrastructure and facilities, developed and managed by an Industrial Park Company.”
This distinction clarifies the differences between Industrial Designation Areas, Industrial Zones and Industrial Parks. However, a common misconception remains—many still believe that industries operating outside of an Industrial Park are automatically located in an Industrial Zone. To better understand this, a detailed comparison can be made between industries inside and outside Industrial Parks, along with the benefits for the government, investors (tenants), and the community:
Comparison of Industries within the Industrial Park and Industrial Zones
In conclusion, a clear understanding of industrial clustering is crucial for fostering sustainable investments. By accurately distinguishing between key terms and navigating the regulatory landscape, stakeholders—ranging from policymakers to investors—can make informed decisions that promote long-term growth and stability. Such clarity not only minimizes delays in permitting processes but also ensures that investments are strategically aligned with Indonesia’s broader industrial development goals. This approach enhances the potential for sustainable economic growth, creating a foundation for future success while minimizing risks for all parties involved.
Source:
Skylight Analytic Hub
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