Optimizing the Role of Law on Preventing Hidrance to Investment on

Special Economic Zone: A Study on Special Economic Zone

Seimangkei, North Sumatera

Budiman Ginting

, Rosnidar Sembiring

, Mahmul Siregar

, and Afrita Abduh

Faculty of Law, Universitas Sumatera Utara, Jl. Universitas No. 4, Medan, Indonesia

Keyword: Special Economic Zone, SeiMangkei Special Economic Zone, Investments

Abstract: The role of law on economic development lies on the ability of the law itself to give a certainty, predictability

and stability. Those kinds of law will be able to reduce or abolish a nonproductive cost which businessman

bears. Legal certainty which has yet to be materialized in the Special Economic Zone on Sei Mangkei has a

huge potential of becoming a hindrance towards the investments on Special Economic Zone Sei Mangkei. This

situation occurs owing to the fact that in general, the norms of positive laws on managing the Special Economic

Zone SeiMangkei has yet to be implemented upon. Various weaknesses on implementing law on Special

Economic Zone SeiMangkei causes the competitiveness on business world and Special Economic Zone

SeiMangkei’s attractiveness to be less. A support from all stakeholders’ dan law is needed to make Special

Economic Zone SeiMangkei of having a significant role on the national and regional economics.

1 INTRODUCTION

The impartiality between the cost needed on chasing

the economic growth and the ability to finance it

independently, encourage countries to involve roles

and funds of national private company and foreign

company on financing the economic development.

The most common way done is to invite the foreign

and domestic investors to conduct a direct

investment. This view causes a competitiveness to

lure domestic funds and foreign funds to conduct a

direct investment. Countries compete to give out ease

off service, fiscal and non-fiscal facility on

investments. Liberalization of the investments

becomes an inevitability on political law on

investments in various countries. Amongst all of the

procedures that countries use, the establishment of a

strategic economic zone is the most frequent

procedure that a country uses. This procedure kept on

developing, and now a days it is known as Special

Economic Zone.

Special Economic Zone has an important role on

improving the economy especially in the industrial

sector, where Special Economic Zone is capable of

creating an improvement of technology,

improvement of national productivity and structural

transformation (Asian Economic Integration Report,

2015).

With the existence of Special Economic Zone

it is expected that the community able to utilize that

policy itself to improve the economy (

Scheepers,

2012).

Coenrad Muller Screepers mentioned that

Special Economic Zone constitutes as one of many

tools that is used by host countries to promote trades,

economic development and to lure investments

(Tambunan, 2001).

In Indonesia, the term Special Economic Zone

was introduced on the 2007 constitution. The term

was used on Chapter XIV, Article 31 on Law Number

25 of 2007 on Investments. Article 31 point (1) of that

constitution mentioned that to fasten the economic

development on certain strategic areas for the national

economic development and to secure the balance of a

region’s development, a Special Economic Zone

could be set and develop. The next two years Law No.

39 of 2009 on Special Economic Zone was made.

Since Law No. 39 of 2009 was made until now,

Indonesia has developed 10 Special Economic Zone

which was spread almost throughout all of the main

islands in Indonesia, such as Sumatra, Java, Sulawesi,

Kalimantan, Maluku, Bangka Belitung dan Papua.

The development of Special Economic Zone directly

caused the spreading of infrastructure development

investments on various areas in Indonesia. The

impartiality of development between Pulau Jawa and

1316

Ginting, B., Sembiring, R., Siregar, M. and Abduh, A.

Optimizing the Role of Law on Preventing Hidrance to Investment on Special Economic Zone: A Study on Special Economic Zone SeiMangkei, North Sumatera.

DOI: 10.5220/0010072613161323

In Proceedings of the International Conference of Science, Technology, Engineering, Environmental and Ramiﬁcation Researches (ICOSTEERR 2018) - Research in Industry 4.0, pages

1316-1323

ISBN: 978-989-758-449-7

outside of Pulau Jawa sooner or later will be

overcome by the development of Special Economic

Zone. According to Darmin Nasution the head of

National Special Economic Zone quoted by

detik.com, stated that with the existence of Special

Economic Zone it is expected the investments flow

will be off the charts. The investment target of Special

Economic Zone was expected to reach Rp. 726

trillion on 2030, with the objective of 632.583 labors.

One of Indonesia’s operating Special Economic

Zone is the Special Economic Zone in Sei Mangkei,

Sumatera Utara. Sei Mangkei Special Economic Zone

is regulated under Government Ordinance No. 29 of

2012 and it is the first Special Economic Zone in

Indonesia which was inaugurated by President Joko

Widodo on January 27

2015. The infrastructure

development inside the region and the infrastructure

district supporting the SeiMangkei Economic

Exclusive Zone has encountered a significant

development. However, the law supporting the

development of SeiMangkei Special Economic Zone

development was regarded to be sub-par. Even

though the existence of law is considered one of the

factors that influenced investors to decide upon their

investments would end up.

Budiman Ginting, along with his associates has

identified numerous problems that is regarded to have

the potential of hampering investment activities in

SeiMangkei. Special Economic Zone. These

problems are part of the problems that was originated

from our infrastructure readiness and more problems

were originated from the law itself, which is, legal

certainty, synchronizing and harmonizing the law,

and consistency on implementing those norms of law

(Ginting, 2017). Therefore, the role of law on

preventing hindrance to investment on Sei Mangkei

Special Economic Zone must be discussed.

2 RESEARCH METHOD

The research method that been used in this reseach is

the sociological legal research and the normative

legal research which approaching and analyze the

economic the law on preventing hidrance n

investment in social economic zone in Sei Mangkei,

the issues and problems that was originated caused by

the role of law that related to the problems itself in

Special Economic Zone in Sei Mangkei.

3 RESULT AND DISCUSSION

3.1 The Framework of Law on Special

Economic Zone in Indonesia

According to the World Bank, Special Economic

Zone is made out of, an area that is geographically

restricted with a separated area of customs, under the

supervision of the administrator, and that the benefits

may be felt by those who lived inside the zone itself.

In other words, Special Economic Zone is a zone

where the government was expecting to raise the

economic growth through the increasing of exports

and investments also providing various competitive

advantage for the entity who chose to locate within

the zone (Rizal, 2015).

That definition is relevant to

the regulation under Article 1 point (1) of the Law No.

39 of 2009 defines a Special Economic Zone as a

specially regulated zone that is located within the

jurisdiction of The Republic Of Indonesia which is set

to carry out an economical function and to receive

certain facilities.

The Politics of Law that that underlines the

existence of Special Economic Zone is to attract the

interest of investors to conduct a direct investment

which promises a number of regulatory exclusivities,

the ease of service and fiscal facility inside Special

Economic Zone. Therefore, the enforcement of

investment services in Special Economic Zone was

released from the government bureaucratic networks

that forms their own institution on managing the

Special Economic Zone. According to Law No.

39/2009 this institution consists of: National Council,

District Council, and District Administrator. Through

the structure of One Stop Service (PTSP), District

Administrator plays a very strategic role in operating

stages. This institution received an abundance of

authority from all of the ministry regarding the non-

department government institution, provincial and

regency/city government. With this method, a long

bureaucratic networking will be abolished owing to

the fact that all relating affairs regarding investments

inside the Special Economic Zone falls into the

authority of District Administrator. And of course,

this is expected to be an attracting factor owing to the

fact that this will reduce the transaction cost for the

investor.

To support the enforcement of Special Economic

Zone, the Indonesian Government has created a

number of constitutions. No less than 50 constitutions

have been made, from Law up until Government

Ordinance has been created to support the Special

Economic Zone. Furthermore, Regional Regulation

which is a law created by province and regency/city

Optimizing the Role of Law on Preventing Hidrance to Investment on Special Economic Zone: A Study on Special Economic Zone

SeiMangkei, North Sumatera

1317

where the Special Economic Zone was located wasn’t

included amongst the number of constitutions

mentioned above. Those constitutions, mainly

regulates: (a). Special Economic Zone’s Operations,

(b). The Establishment of Special Economic Zone,

(c). Bussinesses within the Special Economic Zone

(d). Fiscal and Non-Fiscal Activities, (e). One Stop

Service, (f). Foreign Labor Usage, (g). Delegation of

Authority to the Regional Administrator (h). Permits.

3.2 Law as a Support to Attract

Investors to Invest in the Special

Economic Zone

Adi Sulistiyono mentioned that one of the important

laws that law plays a part in supporting the economic

development is the law’s ability to decrease of abolish

non-productive cost that society and business world

bears. A good set of law should be able to decrease or

even abolish those non-productive cost, rather than to

create the non-productive cost mentioned. This role

played by law through one of its principle, which is

legal certainty. Legal certainty will drive the law itself

to the existence of predictability in economic affairs

(Sulistiyono, 2007).

The problem is that up until now

the main weakness of law that is mostly encountered

by businessman in Indonesia is the uncertainty of the

law itself. Even though legal certainty is needed as

well to calculate and anticipate risks involved, in fact,

legal certainty in a country is one of the factors that

drives the durability of the economy itself

(Sulistiyono, 2007).

Numerous Laws has been made to support the

existence of Special Economic Zone in Indonesia

with the expectations to attract investors both

domestic and foreign. Various product of law has

been made to create a certain condition to attract

investments in Special Economic Zone, which are:

3.2.1 The Negative Investments List (DNI)

Was Not Enforced Generally within

the Special Economic Zone

DNI is a list of businesses that was closed for

investment affairs in Indonesia. DNI determines the

conditions that has to be met for the investors in order

to conduct investments in Indonesia. Those

conditions regulate: the restrictions of foreign

shareholders, the substitute of certain businesses for

micro businesses, small, medium and cooperation, the

obligation to conduct a partnership with the local

community, and certain conditions according to the

constitutions. Currently, the DNI is regulated under

Government Presidential Decree No. 44 of 2016. The

advantage of Special Economic Zone is that DNI is

not enforced in the Special Economic Zone. In other

words, all businesses are open, (except those that has

been restricted by the constitutions itself) and all of

the conditions that has been set by DNI is not required

for businesses within the Special Economic Zone.

3.2.2 The Ease of Goods Traffic

The inflow of goods to Special Economic Zone has

yet to be regulated its restrictions on imported goods,

whereas for the outflow of goods from Special

Economic Zone to Customs areas, the regulations to

restrict imported goods apply.

3.2.3 The Ease of Labor

In Special Economic Zone, Wage Council and

Tripartite Coorparation Institution. Other ease is that

in Special Economic Zone there is only 1 (one) Labor

Union Forum in every company. Legitimizing and

extending the Plans to Employ Foreign Labor

(RPTKA) is enforced in Special Economic Zone, so

that it will not involve a long and winding

administration process. It also applies to the extension

of Foreign Labor Employment Permit (IMTA) which

is also enforced in Special Economic Zone.

3.2.4 The Ease of Immigration

Visitor’s Visa on 30 days period and it could be

extended 5 (five) times 30 days each. Multiple entry

Visa for foreigners and their families. Special Visa or

residence permit for foreigners are given to foreigners

who owns any property inside the Special Economic

Zone. And, elderly foreigners who lives inside the

Special Economic Zone is also given special visas

and a residence permit

3.2.5 The Ease of Landowning

For Businesses/businessman that receive a Building

Rights (HGB) or Right to Use may extend and renew

their rights up to 80 years after it was declared

producing/operation commercially. In case of

property ownership, the extension and renewing

HakPakai may be given until the next 80 years to

every property that is owned legally.

ICOSTEERR 2018 - International Conference of Science, Technology, Engineering, Environmental and Ramiﬁcation Researches

1318

3.2.6 Property Ownership for Foreigners

within Tourism Special Economic

Zone

Foreigners/Foreign Businesses may own a property in

Special Economic Zone (Houses or Flats) through the

Right to Use or Ownership Rights on Flats. Property

owners in Special Economic Zone may be given a

residence permit with Special Economic Zone

Administrator as a guarantor. Moreover, taxes (Sales

Tax on Luxury Goods dan Value Added Tax) may be

given free of charge for luxurious goods.

3.2.7 Tourism as the Main Activity

The form of ease such as: Duty Free, PDRI is not

collected on the inflow of goods outside the customs

areas, free of charge for the excise taxes of auxiliary

materials for a non-excise goods. Shops in tourism

Special Economic Zone may participate in tax refund

activities for foreign passport holders (duty free

shop).

3.2.8 The Ease of Permissions

Special Economic Zone Administrator is authorized

to issue a principle permissions and business

permissions through one stop service in Special

Economic Zone. The acceleration of issuing the

permission must be conducted 3 hours at the very

least (in case if all conditions met). The process and

the completion of permits non permits of

immigration, labor, and landowning are solely done

by the Special Economic Zone Administrator.

3.3 SeiMangkei Special Economic Zone

Development plans on SeiMangkei Special

Economic Zone started on 2008. During that time,

PTPN III (Persero) intended to build an industrial

district that was mainly for the development of all

PTPN III branches and PTPN III owned strategic

business unit palm oil downstream industry. This plan

was later agreed upon by the Minister of State Owned

Enterprises (BUMN) as the full shareholder of PTPN

III created a Ministerial Decree of State Owned

Enterprises (BUMN) No. S-465/MBU/2008 dated

of May 2008 on Industrial Zone Development

Agreement. During that time, Law No. 39 of 2009 on

Special Economic Zone was yet to be created, so up

until then the terminology used is industrial district.

In the year 2009 Law No. 39 of 2009 on Special

Economic Zone (Special Economic Zone Law) was

created. The advantage of Special Economic Zone

which is more compared to an industrial district

caught the attention of the government to change the

status of Sei Mangkei. Industrial District to

SeiMangkei. Special Economic Zone. On the 27

February 2012 the Government regulated

SeiMangkei. Industrial District to Sei Mangkei.

Special Economic Zone on Government Ordinance

No. 29 Of 2012 on Sei Mangkei Industrial Sector. A

year later, PTPN III (Persero) was appointed as Sei

Mangkei Development and Administrator. Special

Economic Zone based on Simalungun’s Regent

Decree No. 188.45/193/Bppd dated 30

January

2013.

To support the operations of SeiMangkei. Special

Economic Zone, PT, Perkebunan Nusantara III

(Persero) as Development and Administrator

Businesses has develop various infrastructures within

the Special Economic Zone. Also, the Central

Government has started building a number of regional

infrastructures outside SeiMangkei. Special

Economic Zone in order to support SeiMangkei.

Special Economic Zone operations such as:

GarduInduk PT PLN kapasitas 60 MW, gas pipes

transmissions network from Belawan – SeiMangkei,

multipurpose harbour Kuala Tanjung, Nasional roads

access SeiMangkei – Kuala Tanjung Harbour /

Belawan, railroads access from SeiMangkei

– Pelabuhan Kuala Tanjung / Belawan and Kuala

Namu international airport.

SeiMangkei. Special Economic Zone has enough

potential on both national and regional economic

development. It is estimated that the total investments

in SeiMangkei. Special Economic Zone will reach the

sum of Rp. 46 trillion from the year 2012 until 2031.

The investment commitments from the investors until

2014 has reach Rp. 6,5 trillion. Whilst the support

from the government itself has reached Rp. 2,9

trillion, to develop a regional infrastructure until

2017, such as railroads, bulk docks, and roads.

SeiMangkei. Special Economic Zone is targeted to

absorb up to 979.000 labors up until the year 2031. It

is expected every year to be receiving an income tax

up to Rp. 363 billion. With the total of investments

and the absorption of labors of that magnitude,

therefore it is not an exaggeration if the people of

North Sumatera and especially the people of

Simalungun and its surroundings to expect the

SeiMangkei. Special Economic Zone to give a

multiplier effect to the regional economic itself. A

number of businesses will be developing as well in

line with the operations on SeiMangkei. Special

Economic Zone.

Optimizing the Role of Law on Preventing Hidrance to Investment on Special Economic Zone: A Study on Special Economic Zone

SeiMangkei, North Sumatera

1319

3.4 The Role of SeiMangkei Special

Economic Zone on Palm Oil

Downstream Industrial

Development

One of the important roles of SeiMangkei. Special

Economic Zone is to develop the Palm Oil

Downstream Industrial Development in North

Sumatera. The palm oil plantation in North Sumatera

has a massive potential to produce palm oil itself.

However, there has been a weakness that has been

often found, which is; that the palm oil plantation

businesses in North Sumatera still rely way too much

on the premier commodity which is the palm oil. This

causes the value added to profits becomes relatively

small if compared to the processing of derivative

products of palm oil from the downstream industry.

The existence of SeiMangkei. Special Economic

Zone with various infrastructures and investment

facilities guaranteed by the law as well as the

guarantee of more than enough available raw

materials is expected to attract the investors to invest

in the palm oil downstream industrial sector. With

this method, the benefits of Special Economic Zone

to the national and regional economy will be even

better. The reliance upon the local and export sales of

raw palm oil with a relatively small profits may

finally be overcoming.

3.5 The Hindrances of Law on

Investment Affairs on SeiMangkei.

Special Economic Zone

Asian Development Bank stated that the hindrances

on investments that has been felt by the investors in

Indonesia is: (i) the uncertainty of the economic

policy and regulations, also the macro economy

instability; (ii) Corruption, both the central

government officials and regional government

officials; (iii) The labor regulations, which is more of

a problem rather than the quality of the labors itself;

(iv) Financing cost, becomes more of a problem

rather than the access itself; (v) High rate taxes,

becomes more of a problem rather than the tax

administration and customs itself; and (vi) The

availability of infrastructures (Asian Development

Bank, 2005).

This study is mainly focused on the hindrances

suffered by the law itself that existed on the

enforcement of investment activities within

SeiMangkei. Special Economic Zone. Several

problems that occurs from the regulating and the

implementing the laws on SeiMangkei. Special

Economic Zone are;

3.5.1 Implementing Law Number 18 of 2008

on Waste Management

According to the Law No. 18 of 2008 on Waste

Management in conjuction with Article 18 Point 1 ,

Government Ordinance No. 81 Of 2012 on Domestic

Waste Management and Similar Domestic Waste

stated that waste collecting is done by: a. settlement

management, commercial district, industrial district,

special district, public facility, social facility, and

other facilities; and b. regency/city government.

Furthermore on point (2) it is stated that settlement

management, commercial district, industrial district,

special district, public facility, social facility, and

other facility in conducting waste management must

provide: a. Place of Waste Management; b. Place of

Waste Management including Reuse, Reduce and

Recycle; and/or c. the device to collect different sets

of trash.

The problem on waste management that is

commonly complained by the investors and managers

in SeiMangkei. Special Economic Zone, based on the

interviews conducted, the investors within the

SeiMangkei. Special Economic Zone mentioned that

there isn’t any landfill side of the wastes that has been

produced by the industries inside the Special

Economic Zone, this causes many accusations from

non-government institution stating that the businesses

activities within the Special Economic Zone dispose

their wastes on the Bah Bolon River which later

causes pollution. Also, according to an informant

from the Manager of SeiMangkei. Special Economic

Zone the Regency Government must provide a

landfill side for wastes that were produced by the

businesses conducted within the Special Economic

Zone.

With the SeiMangkei. Special Economic Zone

operating and the tenant has invested on the Special

Economic Zone itself, it is a necessity to provide a

landfill side location. According to Article 19 point

(2) Government Ordinance No. 81 Of 2012 stated that

the Regency/City Government on conducting waste

management according to point (1): a. provide tools

to manage wastes including the separated wastes that

did not cause any harm to the environment; and b.

conduct a waste transportation from Place of Waste

Management and/or Place of Waste Management

including Reuse, Reduce and Recycle to Landfill

Side.

ICOSTEERR 2018 - International Conference of Science, Technology, Engineering, Environmental and Ramiﬁcation Researches

1320

3.5.2 Implementing the Government

Ordinance No. 96 of 2015 on Amenity

and Facilities in Special Economic

Zone

This Government Ordinance No. 96/2015 on

Amenity and Facilites in Special Economic Zone has

yet to run as it’s supposed to. The Simalungun

Regency Government has yet to response with the

introduction of any regulations regarding the matter.

Therefore, the region tax and retribution facility is yet

to be enjoyed by the investors and Sei Mangkei

administrator. Special Economic Zone. Also, there

has yet to be introduced instructions (juklak) under

the Government Ordinance Number 96 Of 2015 on

ease and facility in Special Economic Zone,so the

investors that are operating within the Sei Mangkei

Special Economic Zone were complaining that the

Government Ordinance No. 96 Of 2015 benefits

cannot be enjoyed yet by the investors because it has

yet to be enforced, so, this particular predicament

causes different perceptions between the tenant and

Sei Mangkei. Administrator Special Economic Zone.

Sei Mangkei. Administrator Special Economic

Zone complains about the ease of taxes that is actually

regulated on Government Ordinance Amenity and

Facilities in Special Economic Zone, however in

reality, the conversion of the land status on

SeiMangkei. Special Economic Zone was firstly a

Right of Tenure (HGU) becoming Right of

Management (HPL) which was written in the Right

of Management Certificate Number 1 Of 2014 this

causes a raise in region taxes, even though the land

that was used for Sei Mangkei. Special Economic

Zone purposes has only been used around 200 acres

from a land that has the size of 2000 acres, also the

land conditions are mostly palm oil plants that is yet

to be an industrial site. The magnitude of the tax

increase with the status of HPL reaches the sum of

Rp. 8 billion, when it was originally when the status

of SeiMangkei. Special Economic Zone was a HGU

is at Rp. 2 billion, and after it converted to HPL, the

taxes rise to a sum of Rp. 10 billion. Sei Mangkei.

Administrator.Special Economic Zone feels that there

has to be an incentive from the Regional Government

(such as: decreasing/abolishing PBB and BPHTB) in

a form of constitution to attract investors to invest on

SeiMangkei. Special Economic Zone.

3.5.3 Implementing Government Ordinance

No. 101 Of 2014 on Dangerous and

Poisonous Waste (B3) in Sei Mangkei

Special Economic Zone

According to Article 3-point (1) Government

Ordinance No. 101 Of 2014 Dangerous and

Poisonous Waste (B3) in Sei Mangkei Special

Economic Zone stated that everyone who produces

B3 wastes must conduct a management on that very

B3 waste. B3 waste management must be integrated

owing to the fact that it may be a health hazard

towards the humanity, other living things and the

environment itself. A company that produces B3

wastes are responsible since it was produced until it

was annihilated (from cradle to grave) with managing

it internally and rightly as well as assuring that all

parties relating to managing B3 wastes are competent

and met any requirements given. And because of that,

ideally a Special Economic Zone in its site must be

operated with a various B3 waste management

facility to protect the both society and environmental

interests.

One of the investor’s expectation is that there will

be an infrastructure solely to manage the B3 wastes

in North Sumatera or its vicinity. Investors who

produces B3 wastes and its management currently

transported and manage by a third party in Cileungsi,

West Java. This predicament causes a relatively high

fee on the company’s operations.

3.5.4 Implementing Presidential Decree No.

97 of 2014 on Enforcement of One Stop

Service SeiMangkei Special Economic

Zone

Article 25-point (5) Law No. 25 of 2007 on

Investments stated that the permits on investments

shall be obtained through the One Stop Service

(PTSP). One Stop Service was intended to help

investors on obtaining the the ease of services, fiscal

facility, and information about investments itself.

One Stop Service is done by an institution that are

authorized in the investment field and that institution

was delegated by an institution who authorizes

permits and non-permits on both Province and

regency/city. Furthermore, it is mentioned that the

regulations about the enforcement of One Stop

Service was regulated on Presidential Decree.

Furthermore, article 23 point (2) Special Economic

Zone Law again mentioned that the enforcement of

One Stop Service (PTSP) particularly on the

investment activities within SeiMangkei. Special

Economic Zone. It is also mentioned that the

Optimizing the Role of Law on Preventing Hidrance to Investment on Special Economic Zone: A Study on Special Economic Zone

SeiMangkei, North Sumatera

1321

enforcement of giving away permits within the

Special Economic Zone was done through One Stop

Service. And to materialize this service, Presidential

Decree No. 97 of 2014 on Enforcement of One Stop

Service, was created.

According to a number of informant’s analysis

and interviews, PTSP in SeiMangkei. Special

Economic Zone has yet to work optimally, this causes

several conditions such as permit affairs and non-

permit affairs are hampered, winding, and

bureaucratic. This is because not all of the

authorization on services has been delegated to the

Regional Administrator and other predicament is

regarding the knowledge and the legal culture of the

Regional Administrator officials.

3.6 Optimizing the Role of Law within

SeiMangkei. Special Economic

Zone

A good set of law will support the development of the

economy within the Special Economic Zone, and vice

versa, a law may be the cause that hampers the

economic development. The way that it should be is

that the law created predictability and stability on

supporting the economic development. According to

the study conducted on SeiMangkei. Special

Economic Zone there are several things that are still

needed to be looked after, such as the law has yet to

give any optimal support on driving the economic

development forward through the existence of

Special Economic Zone.

A legal certainty is very much needed. Not only in

a form of norms inside the constitutions. Legal

certainty is evident from the implementation of legal

norms that has been formulated formally through the

constitutions. Various constitutions that has formally

supported the economic development within the

Special Economic Zone will not be effective if it

wasn’t implemented in the right way.

According to this study, there still has to be

various legal activities needed to optimize the role of

positive law to drive the Special Economic Zone

forward, especially the SeiMangkei. Special

Economic Zone. This predicament may not be only

suffered by SeiMangkei. Special Economic Zone, but

this may also happen to other Special Economic

Zones, therefore, it clear that this predicament has a

potential to be a significant hindrance in the future.

4 CONCLUSION AND

RECOMMENDATION

The success of the accelerated government economic

development program through the Special Economic

Zone development is well supported by the law itself.

The failure of law in this case may hampers the

economic development and it will become factor that

creates a transaction cost. This condition may

decrease the attention of the investors this is because

it will fail to create a decent competition for investors

to invest.

The results in SeiMangkei. Special Economic

Zone study showed that there are still a number of

legal problems that needed to be sorted out. At the

very least, there are four legal problems in

SeiMangkei. Special Economic Zone that has an

impact on the investment activities within the area,

which is; the constitutions is yet to be implemented

properly, for instance Law Number 18/2008 on Waste

Management, Government Ordinance No. 96/2015

on Amenity And Facilities of Special Economic

Zone, implementation of Government Ordinance No.

101 Of 2014 on Dangerous and Poisonous Waste

(B3) in Special Economic Zone and Presidential

Decree No. 97 Of 2014 on Enforcement of One Stop

Service In Sei Mangkei Special Economic Zone.

These problems have the potential to create a

transaction cost for the investors that will later

decrease the business competitiveness and the

attraction of SeiMangkei. Special Economic Zone.

It is advised for any official stake holders, from

central, Province, and Regency to optimize their roles

on supporting the existence of SeiMangkei. Special

Economic Zone. Various enforcing regulations must

be made and implemented. The delegation of

authority to the Special Economic Zone

Administrator must soon be materialized

comprehensively and to the areas that needed the

support attract the investors through investment

incentives according to the authority of the area itself.

REFERENCES

Asian Economic Integration Report 2015. (2015). Special

Chapter : How Can Special Economic Zones Catalyze

Economic Development.

Scheepers, Coenrad Muller. (2012). A Case Study for

Special Economic Zones in South Africa as A Means of

Attracting Foreign Direct Investment, University of

Pretoria.

Tambunan, Tulus. (2001). Perekonomian Indonesia

Beberapa Masalah Penting. Ghalia Indonesia, Jakarta.

ICOSTEERR 2018 - International Conference of Science, Technology, Engineering, Environmental and Ramiﬁcation Researches

1322

Ginting, Budiman. et.al. (2017). Harmonisasi Pengelolaan

Kawasan Ekonomi Khusus Sei Mangkei : Optimalisasi

Industri Hilir Kelapa Sawit Sumatera Utara Untuk

Mendukung Pembangunan Daerah, Suatu Kajian

Hukum. Penelitian Unggulan Perguruan Tinggi,

Universitas Sumatera Utara. Medan.

Rizal, Yose. Damuri. Christian, David. and Atje, Raymond.

(2015). Kawasan Ekonomi Khusus dan Strategis

Indonesia : Tinjauan Atas Peluang dan Permasalahan.

Kanisius. Yogyakarta.

Sulistiyono, A. (2007). Pembangunan Hukum Ekonomi

untuk Mendukung Pencapaian Visi Indonesia 2030.

Professor Inauguration Speech in Economic Law,

University of Sebelas Maret. Surakarta.

Asian Development Bank. (2005). Jalan Menuju Pemulihan

: Memperbaiki Iklim Investasi di Indonesia.

Optimizing the Role of Law on Preventing Hidrance to Investment on Special Economic Zone: A Study on Special Economic Zone

SeiMangkei, North Sumatera

1323