Tue, 19 Jun 2007
From: The Jakarta Post
By The Jakarta Post, Jakarta
Eleven provincial governments have proposed the establishment of special economic zones (SEZ) in their respective areas, but the government says they will have to meet the "tough" criteria set by a government-sanctioned team.

"The National SEZ Committee requires strong commitment on the part of the administration, compliance with local ordinances, and the availability of land and integrated infrastructural services should it want to secure SEZ status," Industry Minister Fahmi Idris said Monday.

He was speaking during a meeting with the House of Representatives' industry and trade commission.

The 11 provincial administrations must be able to offer, among other things, a site extending to a minimum of 500 hectares, adequate infrastructure, and compliance with the requirements of local spatial planning regulations, he explained.

He said that thus far North Sumatra, Riau, Riau Islands, South Sumatra, Banten, West Java, Central Java and East Java, and South Sulawesi, Central Sulawesi and North Sulawesi had all proposed the establishment of SEZs within their areas.

The North Sumatra administration had proposed SEZs for Medan and Kuala Tanjung, while the Riau Islands administration had proposed Batam island as a hub for mechatronic, electronic and shipbuilding industries, Bintan island for textiles, footwear and tourism, and Karimun island for shipbuilding, metal, agro- and marine product industries.

Meanwhile, the East Java administration had proposed the establishment of a hub for jewelry and shipbuilding industries within its area, while the Central Sulawesi administration had sought for Palu to be declared a hub for the rattan industry.

The government already established an SEZ covering Batam, Bintan and Karimun islands last August, with the seven initial investment projects worth US$566.4 million coming from Singapore, South Korea and India. These projects have created a total of 8,057 new jobs.

Fahmi said West Kalimantan's Semperug, Sajingan, Etikong, Temaju and Mempawang, and East Kalimantan's Kutai, East Kutai and Malewio had also been proposed for SEZs.

"A cabinet meeting, however, rejected all of them."

The SEZ concept is a government fast-track program to boost investment, which has long been hampered by bureaucratic red-tape and lack of infrastructure.

Among the benefits for investors are reduced taxes or even duty-free facilities for imported raw materials, and reductions in other taxes.

"Those who operate in SEZs are not subject to value-added tax and income tax on imported raw materials," said Fahmi.

They also benefit from non-fiscal incentives, including accelerated licensing and dispute-resolution processes, he added. (06)



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