Zone Profile

Zone Profile: Makassar Industrial Estate

The Makassar Industrial Estate is a Special Economic Zone (SEZ) located in Indonesia. Seafood processing, cold storage, animal feed, and agricultural processing are some of the main industries in the zone.
,  
June 7, 2022
June 7, 2022


Aerial view of Makassar Industrial Estate
Source:
www.iiie.co.id

Zone Overview

The Makassar Industrial Estate is a Special Economic Zone (SEZ) located on the Indonesian island of Sulawesi.

The Makassar Industrial Estate is located right outside of the city of Makassar, which is the capital of the South Sulawesi province, and has a population of 1.5 million, making it the 13th largest city in the country. [1]

The estate is publicly owned and operated. Tenants include companies in the food processing and manufacturing industries. They enjoy various tax and regulatory incentives, as well as access to transportation infrastructure.

History of the Zone

In 1988, the Indonesian government created the Makassar Industrial Estate.[2]

The estate was created at a time of rapid economic growth in Indonesia. President Suharto, who governed Indonesia from 1968 until 1998, made significant reforms to the economy. Indonesia’s GDP grew from $7 billion USD in 1968 to $84 billion USD in 1988.

In the late 1980s, the Indonesian government passed several reforms to increase exports such as devaluing the currency. Notably, in 1989, the government created SEZ-style “Industrial Estates.” Restrictions on foreign investment within the estates were relaxed. The reforms were successful.[5] The GDP per capita of Indonesia grew 550% during the 1990s, and annual GDP growth averaged at 7%.[6]

Plans for the Makassar Industrial Estate go as far back as 1975, with the growth of the business park mostly occurring in the 1990s and early 2000s. The estate started producing cacao and flour in the early 2000s.[15]

In April 2019, the Makassar New Port opened several kilometers from the estate.[2] Recently there have been plans to expand zone because most of the existing plots have already been sold out.[4]

The Makassar Industrial Estate was founded in 1988, with the goal of attracting sustainable investment into the country. Image Source: Google Earth Pro


Notable Tenants

A major part of KIMA's economic activity is in the seafood processing industry.
Image source:
InputRakyat

As of 2020, there are 270 businesses operating within the industrial estate, 27 of which are Japanese companies.[2] The tenants belong to the following industries: seafood processing, cold storage, animal feed, and agricultural processing.[2]

One notable tenant is Indofood, one of Indonesia’s largest food processors. Another notable tenant is Plastindo, a large plastic packaging manufacturer.

Management of the Zone

The Makassar Industrial Estate is managed by Kawasan Industri Makassar (KIMA).

KIMA is a state owned enterprise which manages Makassar as well as several other industrial estates on the island of Sulawesi.[1] 60% of the company is owned by the Indonesian government, the Government of South Sulawesi owns 30% of the shares, and the remaining 10% is owned by the Makassar city government.[2] It is regulated by the Indonesian Ministry of State Owned Enterprises.[1]

Main Incentives

The laws that currently govern the Makassar Industrial estate are Law 39 from 2009 and Government Regulation 40 from 2021.[2][7][8][9]

Companies located in the zone can take advantage of the following incentives:

  • The ability to write off various investments from the corporate income tax
  • Accelerated depreciation and amortization of assets
  • A 10% tax on dividends
  • Streamlined import / export regulations
  • Easy access to business VISAs
  • 0% interest rates on loans for land purchases
  • The minimum wage for tenants has been reduced from 4.4 million IDR / month ($305) to 2.9 million IDR ($200)
  • KIMA (the management company) will handle environmental impact assessments

Infrastructure

As of early 2020, the zone covers an area of 336 hectares, although there are plans for expansion.[2] The estate provides electricity, clean water, telecommunications, medical clinics, warehouses, and has a fire station. The estate also helps its tenants with construction by providing transportation or rental of equipment. The park is also the only industrial area in Sulawesi that has a liquid waste treatment process.[10]

As for location, the zone is 5 km away from the Sultan Hasanuddin International Airport, 18 km away from the Soekarno Hatta Seaport, 7.6 km away from the train station, and 1.8 km away from the main road.[2]

Corporate Social Responsibilities

The Makassar Industrial Estate’s management company, KIMA, has created various corporate social responsibility programs.[12] These include:

-KIMA Green, a program that seeks to reduce air pollution by planting trees and reducing tenant emissions

-Financing for local entrepreneurs

-An Educational Assistance Program

-​​A Free Rice ATM which gives ATM cards to the community that can be used to withdraw 5 liters of free rice every 2 weeks

Effects of COVID-19

The port of Makassar was empty during the COVID-19 pandemic, which significantly damaged the zone’s production capacity. Image source: VOI

For the few months of the pandemic, the estate had difficulties importing raw materials for processing. The breakdown of the global supply chain caused many tenants to be starved for inputs.[14] Consequently, KIMA suffered financially. The park’s financial performance in 2020 dropped compared to their performanced in 2018. Net profit in 2020 had shrunk by 10% compared to the previous year.[13]

Planned Expansion

In early 2019, the Ministry of Investment announced that they would expand the zone from 336 hectares to 1000 hectares. Existing plots were almost entirely sold out, and the estate found itself unable to accommodate new investors seeking to enter. A second location, called KIMA 2, is scheduled to be built elsewhere in the city Makassar.[11] The Makassar Industrial Estate is also working to modernize its logistics systems.

Conclusion

The Makassar Industrial Estate is one of Indonesia’s fastest growing SEZs, and will likely continue playing a major role in the region over the next decade.

You can find more about Special Economic Zones in our Open Zone Map. 

References

  1. Kawasan Industri Makassar; Indonesia Industrial Estates Directory

https://industrialestateindonesia.com/files/estates/d7Auju3P2MhoavUed3UYgVGGLthO5dmDq3TxzQ53.pdf

  1. Makassar - Maros Industrial Estate: Made in Indonesia

https://madeinindonesia.com/images/minisite/itpc_uae/MAKASSAR-MAROS%20INDUSTRIAL%20ESTATE.pdf

  1. Building the Competitiveness of Makassar Industrial Park as Center for Economic Growth in South Sulawesi; Academy of Accounting and Financial Studies Journal

https://www.abacademies.org/articles/building-the-competitiveness-of-makassar-industrial-park-as-center-for-economic-growth-in-south-sulawesi-12137.html

  1. Ministry of Industry spurs the expansion of Makassar industrial area; IDN Financials

https://www.idnfinancials.com/archive/news/22039/Ministry-of-Industry-spurs-the-expansion-of-Makassar-industrial-area

  1. Place-Based Policies In Indonesia: A Critical Review; World Bank Group

https://documents1.worldbank.org/curated/en/376361571412939496/pdf/Place-Based-Policies-in-Indonesia-A-Critical-Review.pdf

  1. Economy of Indonesia; Wikipedia

https://en.wikipedia.org/wiki/Economy_of_Indonesia#cite_note-SCHWARZ-43

  1. Special Economic Zones; Law Of The Republic Of Indonesia Number 39 Year 2009
    http://www.flevin.com/id/lgso/translations/Laws/Law%20No.%2039%20of%202009%20on%20Special%20Economic%20Zones%20(MoF).pdf
  1. About Implementation Of Special Economic Areas; Government Regulation Of The Republic Of Indonesia

https://jdih.setkab.go.id/PUUdoc/176350/PP_Nomor_40_Tahun_2021.pdf

  1. Indonesia's Omnibus Law: Provisions on Special Economic Zones; ASEAN Briefing

https://www.aseanbriefing.com/news/indonesias-omnibus-law-provisions-on-special-economic-zones/

  1. PT. Industrial Estate of Makassar (Persero); Indonesian Integrated Industrial Estate

https://www.iiie.co.id/about-us/pt-industrial-estate-of-makassar-persero/?lang=en

  1. Kemenperin Dorong Perluasan Kawasan Industri Makassar; Ministry of Investment / BKPM 

https://www2.bkpm.go.id/id/publikasi/detail/berita/kemenperin-dorong-perluasan-kawasan-industri-makassar

  1. PT KIMA CSR, Between Business Strategy and Caring During the Pandemic; Top Business

https://www.topbusiness.id/48004/csr-pt-kima-antara-strategi-bisnis-dan-peduli-saat-pandemi.html

  1. Compared to 2018, PT KIMA's Performance Drops; Bukamata News

https://bukamatanews.id/read/2021/07/01/dibanding-tahun-2018-performa-pt-kima-anjlok

  1. The Impact Of Covid-19 Pandemic On Taxation In Indonesia; International Journal of Recent Scientific Research

http://recentscientific.com/sites/default/files/16437-A-2020.pdf

  1. Indonesia Ujung Pandang Port Urgent Rehabilitation Project Report; Japan International Cooperation Agency

https://www.jica.go.jp/english/our_work/evaluation/oda_loan/post/2002/pdf/043_full.pdf

Tags
Zone Profile

Zone Profile: Makassar Industrial Estate

The Makassar Industrial Estate is a Special Economic Zone (SEZ) located in Indonesia. Seafood processing, cold storage, animal feed, and agricultural processing are some of the main industries in the zone.
,  
June 7, 2022
June 7, 2022


Aerial view of Makassar Industrial Estate
Source:
www.iiie.co.id

Zone Overview

The Makassar Industrial Estate is a Special Economic Zone (SEZ) located on the Indonesian island of Sulawesi.

The Makassar Industrial Estate is located right outside of the city of Makassar, which is the capital of the South Sulawesi province, and has a population of 1.5 million, making it the 13th largest city in the country. [1]

The estate is publicly owned and operated. Tenants include companies in the food processing and manufacturing industries. They enjoy various tax and regulatory incentives, as well as access to transportation infrastructure.

History of the Zone

In 1988, the Indonesian government created the Makassar Industrial Estate.[2]

The estate was created at a time of rapid economic growth in Indonesia. President Suharto, who governed Indonesia from 1968 until 1998, made significant reforms to the economy. Indonesia’s GDP grew from $7 billion USD in 1968 to $84 billion USD in 1988.

In the late 1980s, the Indonesian government passed several reforms to increase exports such as devaluing the currency. Notably, in 1989, the government created SEZ-style “Industrial Estates.” Restrictions on foreign investment within the estates were relaxed. The reforms were successful.[5] The GDP per capita of Indonesia grew 550% during the 1990s, and annual GDP growth averaged at 7%.[6]

Plans for the Makassar Industrial Estate go as far back as 1975, with the growth of the business park mostly occurring in the 1990s and early 2000s. The estate started producing cacao and flour in the early 2000s.[15]

In April 2019, the Makassar New Port opened several kilometers from the estate.[2] Recently there have been plans to expand zone because most of the existing plots have already been sold out.[4]

The Makassar Industrial Estate was founded in 1988, with the goal of attracting sustainable investment into the country. Image Source: Google Earth Pro


Notable Tenants

A major part of KIMA's economic activity is in the seafood processing industry.
Image source:
InputRakyat

As of 2020, there are 270 businesses operating within the industrial estate, 27 of which are Japanese companies.[2] The tenants belong to the following industries: seafood processing, cold storage, animal feed, and agricultural processing.[2]

One notable tenant is Indofood, one of Indonesia’s largest food processors. Another notable tenant is Plastindo, a large plastic packaging manufacturer.

Management of the Zone

The Makassar Industrial Estate is managed by Kawasan Industri Makassar (KIMA).

KIMA is a state owned enterprise which manages Makassar as well as several other industrial estates on the island of Sulawesi.[1] 60% of the company is owned by the Indonesian government, the Government of South Sulawesi owns 30% of the shares, and the remaining 10% is owned by the Makassar city government.[2] It is regulated by the Indonesian Ministry of State Owned Enterprises.[1]

Main Incentives

The laws that currently govern the Makassar Industrial estate are Law 39 from 2009 and Government Regulation 40 from 2021.[2][7][8][9]

Companies located in the zone can take advantage of the following incentives:

  • The ability to write off various investments from the corporate income tax
  • Accelerated depreciation and amortization of assets
  • A 10% tax on dividends
  • Streamlined import / export regulations
  • Easy access to business VISAs
  • 0% interest rates on loans for land purchases
  • The minimum wage for tenants has been reduced from 4.4 million IDR / month ($305) to 2.9 million IDR ($200)
  • KIMA (the management company) will handle environmental impact assessments

Infrastructure

As of early 2020, the zone covers an area of 336 hectares, although there are plans for expansion.[2] The estate provides electricity, clean water, telecommunications, medical clinics, warehouses, and has a fire station. The estate also helps its tenants with construction by providing transportation or rental of equipment. The park is also the only industrial area in Sulawesi that has a liquid waste treatment process.[10]

As for location, the zone is 5 km away from the Sultan Hasanuddin International Airport, 18 km away from the Soekarno Hatta Seaport, 7.6 km away from the train station, and 1.8 km away from the main road.[2]

Corporate Social Responsibilities

The Makassar Industrial Estate’s management company, KIMA, has created various corporate social responsibility programs.[12] These include:

-KIMA Green, a program that seeks to reduce air pollution by planting trees and reducing tenant emissions

-Financing for local entrepreneurs

-An Educational Assistance Program

-​​A Free Rice ATM which gives ATM cards to the community that can be used to withdraw 5 liters of free rice every 2 weeks

Effects of COVID-19

The port of Makassar was empty during the COVID-19 pandemic, which significantly damaged the zone’s production capacity. Image source: VOI

For the few months of the pandemic, the estate had difficulties importing raw materials for processing. The breakdown of the global supply chain caused many tenants to be starved for inputs.[14] Consequently, KIMA suffered financially. The park’s financial performance in 2020 dropped compared to their performanced in 2018. Net profit in 2020 had shrunk by 10% compared to the previous year.[13]

Planned Expansion

In early 2019, the Ministry of Investment announced that they would expand the zone from 336 hectares to 1000 hectares. Existing plots were almost entirely sold out, and the estate found itself unable to accommodate new investors seeking to enter. A second location, called KIMA 2, is scheduled to be built elsewhere in the city Makassar.[11] The Makassar Industrial Estate is also working to modernize its logistics systems.

Conclusion

The Makassar Industrial Estate is one of Indonesia’s fastest growing SEZs, and will likely continue playing a major role in the region over the next decade.

You can find more about Special Economic Zones in our Open Zone Map. 

References

  1. Kawasan Industri Makassar; Indonesia Industrial Estates Directory

https://industrialestateindonesia.com/files/estates/d7Auju3P2MhoavUed3UYgVGGLthO5dmDq3TxzQ53.pdf

  1. Makassar - Maros Industrial Estate: Made in Indonesia

https://madeinindonesia.com/images/minisite/itpc_uae/MAKASSAR-MAROS%20INDUSTRIAL%20ESTATE.pdf

  1. Building the Competitiveness of Makassar Industrial Park as Center for Economic Growth in South Sulawesi; Academy of Accounting and Financial Studies Journal

https://www.abacademies.org/articles/building-the-competitiveness-of-makassar-industrial-park-as-center-for-economic-growth-in-south-sulawesi-12137.html

  1. Ministry of Industry spurs the expansion of Makassar industrial area; IDN Financials

https://www.idnfinancials.com/archive/news/22039/Ministry-of-Industry-spurs-the-expansion-of-Makassar-industrial-area

  1. Place-Based Policies In Indonesia: A Critical Review; World Bank Group

https://documents1.worldbank.org/curated/en/376361571412939496/pdf/Place-Based-Policies-in-Indonesia-A-Critical-Review.pdf

  1. Economy of Indonesia; Wikipedia

https://en.wikipedia.org/wiki/Economy_of_Indonesia#cite_note-SCHWARZ-43

  1. Special Economic Zones; Law Of The Republic Of Indonesia Number 39 Year 2009
    http://www.flevin.com/id/lgso/translations/Laws/Law%20No.%2039%20of%202009%20on%20Special%20Economic%20Zones%20(MoF).pdf
  1. About Implementation Of Special Economic Areas; Government Regulation Of The Republic Of Indonesia

https://jdih.setkab.go.id/PUUdoc/176350/PP_Nomor_40_Tahun_2021.pdf

  1. Indonesia's Omnibus Law: Provisions on Special Economic Zones; ASEAN Briefing

https://www.aseanbriefing.com/news/indonesias-omnibus-law-provisions-on-special-economic-zones/

  1. PT. Industrial Estate of Makassar (Persero); Indonesian Integrated Industrial Estate

https://www.iiie.co.id/about-us/pt-industrial-estate-of-makassar-persero/?lang=en

  1. Kemenperin Dorong Perluasan Kawasan Industri Makassar; Ministry of Investment / BKPM 

https://www2.bkpm.go.id/id/publikasi/detail/berita/kemenperin-dorong-perluasan-kawasan-industri-makassar

  1. PT KIMA CSR, Between Business Strategy and Caring During the Pandemic; Top Business

https://www.topbusiness.id/48004/csr-pt-kima-antara-strategi-bisnis-dan-peduli-saat-pandemi.html

  1. Compared to 2018, PT KIMA's Performance Drops; Bukamata News

https://bukamatanews.id/read/2021/07/01/dibanding-tahun-2018-performa-pt-kima-anjlok

  1. The Impact Of Covid-19 Pandemic On Taxation In Indonesia; International Journal of Recent Scientific Research

http://recentscientific.com/sites/default/files/16437-A-2020.pdf

  1. Indonesia Ujung Pandang Port Urgent Rehabilitation Project Report; Japan International Cooperation Agency

https://www.jica.go.jp/english/our_work/evaluation/oda_loan/post/2002/pdf/043_full.pdf

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