Policy Analysis of Coastal-Based Special Economic Zone Development Using System Dynamics

Special Economic Zone (SEZ) development is becoming a preferable policy by the Indonesian government to boost economic growth in less-developed local regions. This is because of the promise that SEZ could attract investment and job creation based on local competitive commodities. One of these areas is Bitung SEZ, North Sulawesi - Indonesia, a coastal-based SEZ, as its strategic position for logistics, fishery resources, and coconut plantation. To explore the promise of growth proposed by developing SEZ in Bitung, we developed a Systems Dynamics model of the interaction between economic growth, social development, and environmental impacts. Based on the model understanding and development, we identified three factors the Indonesian government should improve: coconut plantation productivity, fisheries ship management, and education index. With these three factors in mind, several policy options were tested in the model, resulting in a more substantial impact than the business-as-usual condition.