Wednesday, May 09, 2007

My Undergraduate Thesis - 2004

A Comparison Study on Economic Factor and The Performance of Free Trade Zone

(Study Case in Batam, Labuan, Subic and Shenzhen)

Executive Summary

The economic growth could not reach all citizen because of development disparity. This is caused by the limitation of development funding. In order to provide the funding, government need to develop growth centre across the country. Several regulation on developing growth centre has been done such as special purpose zone, integrated economic development zone and fast growth zone, based on the National Spatial Planning (Rencana Tata Ruang Wilayah Nasional/RTRWN) year 1997 which was created by the National Planning Agency (Bappenas).

However, there has not been any zones that has develop as rapid as Batam in the last 30 years. Batam itself has been granted as a bounded zone, one of its kind for the last 25 years. However, to adapt the new economic condition and globalization, Batam has been given a new status as a Free Trading Zone in Indonesia, following Sabang (this has not develop although its has been a Free Trading Zone for 7 years).

The research focuses on economy competitive factors and development performance indicator based on comparisons to four other Free Trading Zone which are Labuan (Malaysia), Subic (Philippines) and Shenzhen (China). Moreover, the four Free Trade Zones are rank based on their achievement in economic competitive factor and performances in order to understand how the economy factors influenced the development.

As a literature review, the following table shows growth centre types and examples


Growth Centre Type



Bounded Zone

Jakarta Tanjung Priok


Export Processing Zone



Free Port

Mauritius, Labuan


Free Trade Zone

Shenzhen, Subic, Batam

The Research found that there are several economic factors that are consider. Below are the considered factors:

  1. Micro – Local competitive factor
    1. Location, distance to the growth centre and transportation type
    2. Human resources such as age, culture, and number of people
    3. Local Government such as investment procedure, migration law
    4. Infrastructure
  2. Macro competitive factor
    1. Federal Government such as Free Trade Zone law and the function of the Free Trade Zone
    2. Country Cooperation for market access

In addition, economic development indicators that are analyze:

1. Total number and total value of investment

2. Total number and total value of export

3. Total number and total value of Gross Domestic Product

4. Total number and total value of tax

5. Number of migrant and unemployment

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