Introduction

In late 2015, the task force that for the past eight years had been working in the regional development office towards establishing a special economic zone (SEZ, or KEK in Indonesian) in Tarakan, a borderland city in Indonesia, closed down. It was a rather unremarkable event, not even reported by the local newspapers. The hope had been to develop KEK Tarakan as part of a national government programme to establish centres of economic growth in less developed parts of Indonesia, such as the borderlands on the island of Borneo. The initially ambitious project was stranded on disagreements between national and regional governments as well as a lack of serious interest from the industries it was supposed to support.

Why did this particular development zone never materialise at a time when SEZs are proliferating across Indonesia as well as in borderlands around Southeast Asia? Our argument in this chapter is twofold. We argue that the borderland surrounding Tarakan can be analysed as a de facto development zone. It turned out that there simply was no widespread local need for a SEZ to be established, because most of the formal benefits of such a zone were already there in practice. On the contrary, the local government and businesses were wary that a formal SEZ might bring increased scrutiny and control from the national government in Jakarta. The second part of our argument is that this de facto development zone is multigenerational and has been undergoing a continual process of reconstruction and deconstruction for a long time.