06/11/2012 (Jakarta Globe) - As many as 10 investors have expressed interest in putting trillions of rupiah into Indonesia’s Sei Mangkei special economic zone in North Sumatra, a high level official at the Industry Ministry has said.

According to Dedi Mulyadi, the ministry’s director general for industrial zone development, investors would develop a total of 200 hectares of land into industrial pursuits ranging from crude palm oil derivative products to fertilizer and industrial gas, among other ventures.

Data from the ministry show Sinergi Oleo Nusantara, which is 30 percent owned by state plantation firm Perkebunan Nusantara (PTPN) III, plans to invest Rp 3.74 trillion ($389 million) in the downstream palm oil sector and an oleochemical plant in the zone.

Unilever Oleokimia Indonesia — which is affiliated with Indonesia’s top consumer goods company, Unilever Indonesia — will pour in Rp 2.45 trillion, also in the oleochemical industry.

Bambang Permadi Soemantri Brodjonegoro, the acting head of fiscal policy at the Finance Ministry, said in September that the government had awarded a tax holiday to Unilever Oleokimia Indonesia.

Sei Mangkei is also in the crosshairs of Cipta Buana Utama Mandiri, which plans to build a fertilizer plant worth Rp 537 billion.

Ministry data did not reveal any other specific planned investment sums, but listed state plantation firms PTPN III and PTPN IV, and industrial gas supplier Aneka Gas, as prospective investors.

“These interests for investment are awaiting the status of the land in the Sei Mangkei zone,” Dedi said on Friday.

Sei Mangkei’s special status was cemented by a government regulation issued in February. It set out a 36-month deadline for developing the industrial zone. Investors operating there would receive incentives like tax breaks, lower import tariffs and the provision of supporting facilities.

However, development has been hindered since the Simalungun district head, where Sei Mangkei is located, refused to issue a permit for the special zone on the grounds that the South Sumatra Legislative Council (DPRD) had yet to pass a spatial master plan bylaw.

Dedi said that with an expedited change of the zone’s status, he was sure that more investors would express interest. “There are 10 now; this shows that the prospects are really good,” he said.

Hatta Rajasa, Indonesia’s coordinating minister for the economy, in July threatened to rescind Sei Mangkei’s special economic status if local leaders could not resolve the spatial planning problem.

Also of concern, Dedi said recent labor demonstrations had caused anxiety among prospective investors, who were looking at doing business in Indonesia with increasing uncertainty.

He added that the ministry and the Industrial Estates Association (HKI) were drafting criteria for industrial park facilities that would be eligible for a “vital object” designation. The label would allow for a given facility to receive added protection from law enforcement.

“It should be effective in preventing possible acts of vandalism against facilities in industrial parks,” Dedi said.

The granting of Sei Mangkei’s status is part of the government’s economic master plan (MP3EI), consisting of Rp 4,000 trillion in total investment for infrastructure projects and value-adding facilities for processing natural resources. The plan aims at facilitate Indonesia’s rise to one of the world’s top 10 economies.