BSD Pushes Development Plans to KEK

Chief Transformation Officer of Sinar Mas Land, Mulyawan Gani, stated that BSD plans to build a SEZ (Special Economic Zone) that focuses on the fields of education, biomedicine, research, and the digital ecosystem. In the past 40 years, BSD has built an educational ecosystem with a total of 110 schools in the BSD area.

In addition, for the past eight years, BSD has also developed a digital ecosystem with the entry of start-up businesses and corporate players based in BSD. BSD utilizes the smart city concept to realize a digital-based health ecosystem supporting the area. Moreover, eight hospitals and a number of health clinics have been built.

Also read: BSD is being studied as a new SEZ, the government claims there are no political considerations

The proposed development of an integrated education, biomedical, and digital ecosystem zone, known as a Special Economic Zone (KEK), is deemed to accelerate the area's development. The administrative processes and requirements towards establishing the KEK are currently being carried out.

"We appreciate the status of PSN, in addition to continuing to move towards KEK in parallel. KEK is the key to acceleration so that the education, biomedical and digital ecosystems can truly work together and make regional development much faster. "Not only for BSD, but it also has an impact on Banten," said Gani when met in Jakarta, Wednesday (27/3/2024).

Gani added, the health special economic zone will focus on biomedical research centers and testing facilities, nursing schools, and international standard health clinics or hospitals. Collaboration will be done with universities to utilize shared laboratory facilities through cooperation with startup businesses.

Every year, there are 1.1 million visitors or medical tourists to Singapore and Malaysia, causing the country to lose foreign exchange of up to Rp 60 trillion. Moreover, seeking medical treatment abroad will also incur other expenses, such as accommodation and shopping. The biomedic area to be developed in BSD is expected to become a destination for medical tourists who have been seeking treatment abroad.

To date, there are 15 potential tenants and investors in biomedical and health SEZs. Some of them come from Japan and Korea.

"The development plan towards the BSD special economic zone is aimed at accelerating the development of the area's ecosystem, without starting from scratch. The hope is to provide a much faster dual effect," added Gani.

Also read: 5 Stagnant SEZs Threatened with Closure

He added that multiple impacts have occurred during the development of the independent city of BSD. One of them is the growth of the surrounding area, including the presence of large or small developer projects in the vicinity of BSD.

According to Kompas, the government is currently evaluating existing KEK. As of June 2023, several SEZs are threatened with stagnation, including the Palu SEZ (Central Sulawesi), Bitung and Likupang SEZ (North Sulawesi), Morotai SEZ (North Maluku), Sorong SEZ (West Papua), and Maloy Batuta Trans Kalimantan SEZ (East Kalimantan ). Five of the six SEZs are in Sulawesi, Maluku and Papua.

The government said it was receiving many new proposals as well as evaluating existing SEZs. Investment in KEK has indeed increased, but some of it has not met the target. This will be reviewed by the government. Stagnant areas are threatened with having their special status revoked (Kompas.id, 11/23/2023).

Not necessarily successful

Director of Strategic Consulting at Cushman and Wakefield Indonesia, Arief Rahardjo, stated that so far, the development of areas that have KEK status in Indonesia may not necessarily be successful and face difficulties in finding investors. Investors who will enter PSN or KEK areas still calculate potential, location, and accessibility. KEK status in some areas is even threatened to be revoked because the development of the area does not show expected results.

"Some of the designated Special Economic Zones (KEK) that have received government facilities have also been proven to be difficult to develop due to the lack of accessibility and facilities. The area cannot develop easily even though it has already obtained KEK status. This depends heavily on the concept and projects developed," he said.

This condition is different from the Pantai Indah Kapuk (PIK) and BSD areas which have long been developed as independent cities. The development of an ecotourism concept for PIK is nothing new, as are health, education and digital areas for BSD. Before having PSN status, the independent cities of PIK and BSD had also developed these concepts and attracted investors.

On the other hand, both independent cities have advantageous and strategic locations, with BSD located in the south of Jakarta with toll road accessibility and electric train access. The development of the area is also equipped with supporting public facilities, such as an intermodal terminal. Meanwhile, PIK, located in the north of Jakarta, is supported by its proximity to the airport with easy toll access.

The designation of locations for National Strategic Projects (PSN) up to Special Economic Zones (KEK) in self-sufficient cities developed by developers is considered to provide added value and encourage the long-term development of the property sector in the area. As a result, the growth of the property in the area is more assured. The influx of investors will also help market housing and increase the value of the area.

"The PSN or KEK status will accelerate the development of areas in the north and south of Jakarta and attract greater attention from investors," said Arief.

Nevertheless, he reminds us that the development of PSN areas in PIK and BSD is expected to have an impact on the development of surrounding areas, targeting the interests of the wider community, and not just creating exclusive areas. The facilities provided must also be accessible to the general public from various backgrounds.

Also read: PIK and BSD shares rise after the government determines it to be PSN