Special Economic Zones (SEZs) are often framed as tools for regional development, yet research has largely overlooked how national regulatory design shapes their trajectories. This paper examines Indonesia, a decentralised archipelago with significant regional disparities, to assess how its SEZ legal and regulatory framework produces either isolated enclaves or place-based embedded outcomes. It offers a content analysis of SEZ-specific and sectoral regulations across four dimensions: objectives, incentives, institutions and spatial aspects. Findings show a hybrid picture: incentives lean towards an enclave perspective, while spatial and institutional arrangements represent opportunities for embedded, place-based development. However, recentralisation trends in governance and spatial distribution risk re-enclaving SEZs. By clarifying how institutional capacity and spatial integration shape SEZ trajectories, this study informs debates on enclave-embeddedness models by emphasising their dynamic spectrum. It provides policy lessons for designing place-based SEZs in decentralised developing countries, where embeddedness must be actively sustained rather than assumed.
Kuntjara et al. (2026) studied this question.