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What is a potential downside of investing in Indonesian Special Economic Zones (SEZs) compared to other locations?

Q&A

Indonesia’s Special Economic Zones (SEZs) offer investors preferential regulatory infrastructure and tax policies.  Indonesia currently has nine SEZs in place, and President Joko Widodo’s government plans for a total of twenty-five by the end of 2019.  While Indonesian SEZs are undoubtedly attractive to foreign investors, it is important to keep in mind that one of their primary objectives is to spur development in rural and less industrialized regions.  As a result, investors who invest in an SEZ may be met with unreliable power sources and a shortage of skilled labor. 



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