Business Feasibility Analysis of Special Economic Zone in Morowali

Abstract

This study investigates the business feasibility of developing a Special Economic Zone (SEZ) in Morowali Regency, Central Sulawesi, Indonesia. Initiated by PT. XYZ, the project aligns with the Indonesian government's policy to accelerate regional development, enhance industrialization, and promote downstream processing of mineral resources, particularly nickel. The proposed SEZ is designed to become an integrated industrial hub for nickel smelting, stainless steel manufacturing, and lithium battery raw material production. The feasibility analysis focuses on financial evaluation. Financial feasibility is assessed using investment appraisal techniques such as Net Present Value (NPV), Internal Rate of Return (IRR), and Payback Period (PP). The findings indicate an NPV of Rp 236.810.093.836, an IRR of 12.61%—surpassing the company’s Weighted Average Cost of Capital (10.26%)—and a payback period of 11.61 years, establishing the project’s financial viability. The revenue model comprises land sales and leases as well as recurring income from utility services, including electricity, water, wastewater management, and port logistics. This diversification ensures long-term sustainability and resilience against market fluctuations. Operating and production costs were projected conservatively, accounting for fixed and variable components, inflation, and regional benchmarks. The project is expected to stimulate local employment, infrastructure development, and foreign investment, contributing positively to national economic growth. This study concludes that the proposed SEZ development in Morowali is financially viable. Strategic recommendations include phased infrastructure implementation, robust risk management frameworks, enhancement of utility services, and partnership development with stakeholders. These measures are expected to ensure the project's long-term success and its role as a key contributor to Indonesia’s industrial and economic advancement.