Indonesia's IMIP Airport: Illegal Operations or Oversight Failure?

The controversy highlights Indonesia’s core dilemma — attracting investment and industrial growth without surrendering control or weakening governance.

Sjafrie Sjamsoeddin

A privately run airport inside one of Indonesia’s largest nickel-processing hubs has ignited a national debate over sovereignty and oversight. It is alleged to have operated for six years without central supervision or the routine presence of customs, immigration or AirNav officials, raising urgent questions about what passed through that airspace — and under whose authority.

The private airport sits within the Indonesia Morowali Industrial Park (IMIP), a 4,000-acre complex in Morowali, Central Sulawesi. Backed by Chinese and Indonesian investment, IMIP is central to the global EV battery supply chain and a strategic pillar of Indonesia’s industrial policy.

The controversy has drawn political attention nationally and regionally. During a visit to Morowali last month, Defence Minister Sjafrie Sjamsoeddin questioned the airport’s status, warning that any facility operating without central authority undermines the state and that there cannot be a “second republic” within Indonesia. Finance Minister Purbaya Yudhi Sadewa has also said the government will verify whether the airport is properly licensed.

However, IMIP’s management rejects any wrongdoing, arguing that Indonesia’s Aviation Law No. 1/2009 allows special-purpose airports to support industrial operations with ministerial approval.

However, this is not the only such airport in Indonesia; similar special-status facilities exist elsewhere. The controversy stems from allegations that it operated regular international flights — a breach of the law, which bars such airports from handling international traffic or commercial passengers.

IMIP: Indonesia’s Nickel Powerhouse

IMIP is one of the world’s largest nickel-processing and stainless-steel complexes, located on the Central Sulawesi coast. It is central to Indonesia’s push to become a major hub for EV battery materials, with its nickel serving as a key input for battery cathodes.

Indonesia holds the world’s largest nickel reserves, and since banning raw ore exports in 2020, it has drawn a surge of foreign investment—especially from China—into processing and refining. IMIP is the flagship of this policy. Chinese firms, led by Tsingshan, have built processing lines at a scale and pace unmatched by Western companies. The complex now feeds both the stainless-steel and EV battery industries, making it vital to the global energy transition and a focal point of China–West cooperation and competition.

A Red Flag

Private airstrips are common in remote mining and plantation areas, but IMIP’s airport has raised deeper concerns for three structural reasons.

First, this was not a small strip used occasionally by executives; it reportedly handled regular traffic, including chartered worker flights. Second, the controversy centres on whether the airport had consistent on-site customs, immigration and aviation regulators. In such a strategic industrial zone, any sign of weak oversight quickly becomes a sovereignty issue. Third, IMIP is heavily Chinese-invested and Chinese-managed — effectively controlled by foreign entities.

The issue would likely have drawn far less attention had domestic firms been involved. But from an Indonesian perspective — shaped by history, labour disputes, environmental concerns and anxieties over China’s rise — such a situation carries weight. The idea of a Chinese-dominated enclave running an airport with minimal state visibility was bound to raise suspicion.

China’s Footprint

In many ways, IMIP embodies China’s industrial power. Chinese firms have supplied the financing, engineering, technology and management needed to process Indonesian ore at scale. This is the main reason Indonesia so quickly emerged as the world’s centre of nickel processing.

But such dominance also creates sensitivities. If Indonesia’s nickel sector grows too dependent on Chinese capital, it risks losing bargaining power. Rapid industrial expansion can also outpace local regulators’ capacity, fuelling concern that foreign companies may be carving out “special zones” where the state appears weaker.

China–West Rivalry?

The EV transition has turned nickel, cobalt and rare earths into geopolitical tools. Competition over nickel is real but far from equal: China dominates Indonesia’s processing capacity by a wide margin.

China’s early investment in IMIP created a structural advantage. Western firms, constrained by stricter environmental rules and slower corporate processes, never built smelters at a comparable speed. As a result, Indonesia’s most strategic mineral zone is shaped overwhelmingly by Chinese corporate logic. Western companies and governments have only recently begun to take Indonesian nickel seriously. What is unfolding is not an outright battle but a subtler contest for long-term control of supply chains.

Indonesia’s Future Dilemma

A single airport does not threaten Indonesia’s sovereignty, but the IMIP case does raise doubts about whether some industrial enclaves are growing faster than the state can regulate. The real risk is not secession but governance erosion. The episode reflects Indonesia’s core tension: seeking foreign investment without foreign dominance, rapid industrialisation without regulatory decay, and leadership in the nickel and battery sector without weakening sovereignty. These balances are difficult for any investment-dependent country, and IMIP’s airport has simply made them more visible.

(The writer is a foreign affairs expert. Views personal.)