Special Economic Zones and the integration of spatial considerations: the case of national policies in Indonesia

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.