Indonesia to Launch Six Special Economic Zones Including Its First Halal SEZ

Indonesia is preparing to take another big step in its economic journey with the launch of six new Special Economic Zones (SEZs). Among them, one stands out as a milestone—the country’s first Halal SEZ, which will be established in Sidoarjo, East Java. The initiative, confirmed by the Coordinating Ministry for Economic Affairs in early September 2025, now awaits final approval from President Prabowo Subianto.

The move reflects Indonesia’s commitment to building a diverse, resilient, and globally competitive economy. By incorporating halal industries into its SEZ strategy, the government is targeting one of the fastest-growing consumer markets in the world.

Why the Halal SEZ Matters for Indonesia

The Halal SEZ represents a forward-looking strategy that goes beyond traditional manufacturing and services. Indonesia, home to the world’s largest Muslim population, already has an inherent advantage in the halal sector. Yet much of the country’s raw halal materials, such as gelatin, are processed abroad—particularly in China—before being exported to international markets.

By localizing processing in the Halal SEZ, Indonesia seeks to:

• Add greater domestic value before export.

• Capture more revenue within the national economy.

• Build a globally recognized halal hub that can serve regions such as the Middle East, Southeast Asia, and Africa.

Early reports suggest that investors are showing significant interest, especially in gelatin processing and related industries, signaling strong potential for rapid growth once the zone becomes operational.

The Current SEZ Landscape in Indonesia

Indonesia already operates 25 SEZs, divided between 13 industrial and 12 service-based zones. Together, they have attracted nearly US$19.4 billion (Rp 294.4 trillion) in investments and created more than 187,000 jobs.

Performance in 2025 alone has been remarkable. In the first half of the year, SEZs absorbed Rp 40.48 trillion (US$2.56 billion) in investments—almost half of the annual target of Rp 84.1 trillion. Exports from these zones have also surged, reaching IDR 82 trillion (US$5.19 billion), driven by industries like alumina, battery anodes, and copper.

Standout Performers Driving National Growth

Two SEZs—Gresik in East Java and Kendal in Central Java—highlight how these zones are reshaping Indonesia’s economy.

• Gresik SEZ has already drawn Rp 100.85 trillion in investments by mid-2025. Hosting 32 industries and employing over 41,000 workers, it has become a leader in downstream metal processing. The establishment of the world’s largest single-line copper smelter by PT Freeport Indonesia in this zone marks a turning point. It is expected to generate US$4 billion in export potential and reduce imports by US$2.3 billion.

• Kendal SEZ has accumulated Rp 90.12 trillion in investments across 128 industries, employing over 66,000 workers. It has quickly become an international hub for electric vehicle (EV) supply chains, including the production of lithium battery anodes for major automakers.

Together, these zones demonstrate how SEZs can combine infrastructure, policy incentives, and industry specialization to attract global investors and drive long-term competitiveness.

Learning from Sanur’s Health SEZ

Another example of innovation in SEZ planning is the Sanur Health SEZ in Bali, inaugurated earlier in 2025. Built on 41 hectares of land, this zone has attracted over IDR 10.2 trillion (US$620 million) in investments and is expected to generate 43,000 jobs. Anchored by the Bali International Hospital, it provides advanced medical services such as oncology, cardiology, and emergency care, while also promoting wellness tourism.

The Sanur project showcases how SEZs can focus on specialized industries—in this case, healthcare—to reduce dependence on imports, improve domestic services, and create new export opportunities. Indonesia’s Halal SEZ is expected to follow a similar model, tailored to meet both domestic demand and international opportunities in halal food, pharmaceuticals, and logistics.

Strategic Impact of the New SEZs

The upcoming six SEZs, particularly the Halal SEZ, are part of Indonesia’s broader strategy to:

• Diversify the economy by moving away from overdependence on natural resources.

• Create sustainable jobs across regions and skill levels.

• Enhance global competitiveness in key sectors such as halal, metals, batteries, and healthcare.

• Boost exports by strengthening value chains within Indonesia rather than sending raw materials abroad.

This aligns with the government’s ambition to position Indonesia as a leading global hub in halal products, renewable energy, advanced manufacturing, and specialized services.

What It Means for Stakeholders

• Investors: New opportunities in halal industries, pharmaceuticals, logistics, and advanced manufacturing.

• Businesses: Access to world-class infrastructure and policy incentives in SEZs designed to encourage growth.

• Workers: Creation of thousands of new jobs across different regions and industries.

• Policymakers: A stronger foundation to meet development goals, reduce imports, and drive balanced regional growth.

Indonesia’s SEZ program has proven to be a powerful driver of growth, investment, and innovation. The addition of six new zones—including the first Halal SEZ—will not only expand the country’s economic footprint but also place it at the forefront of emerging global industries.

With halal products projected to be a multi-trillion-dollar global market, the Sidoarjo Halal SEZ could transform Indonesia into a key supplier of certified halal goods and services, helping the country secure its place in the global halal economy.

By integrating sectoral diversity, global partnerships, and long-term investment strategies, Indonesia’s expanding SEZ ecosystem signals a future of stronger exports, more jobs, and greater resilience.