Thu, 11 Dec 2008
The government is considering to mandate and set aside an allotted space for micro, small and medium enterprises (MSMEs) in special economic zones (SEZs) under a new draft law.

Trade Minister Mari Elka Pangestu said Wednesday in a House of Representatives hearing it was necessary to provide MSME zones in SEZs to stimulate the economy of the region in which the SEZ is situated.

"One way to leverage regional economies is by allocating a zone for MSMEs so they can take part in industrial processes," she said before members of House special committee tasked with deliberating the bill.

A proposed location must comply with local spatial planning, be supported by regional authorities, be well situated for trade traffic or international sea traffic and have proper infrastructure and clear boundaries, she said.

A legislator of the Democracy Pioneer Star Party (PBPD) faction said there should be special articles stipulating the presence of MSMEs in SEZs.

"There should be a regulation about where MSMEs are best placed in an SEZ. Big businesses should also work with MSMEs in these zones," he added.

The bill will also mandate the use of locally made products and services, as well as locally manufactured raw materials and machinery for production, in SEZs.

Commenting on this, Industry Minister Fahmi Idris agreed that the bill should offer a wide range of opportunities for MSMEs to run their businesses in SEZs.

"It'll be a good idea to determine the area needed for MSMEs in an SEZ. I believe the government should do that," he said.

He also said authorities of SEZs would have rights to impose "incentives and disincentives" to support regional economies.

The bill is designed to attract new foreign and domestic direct investments in regions.

"Job opportunities will increase in regions if investment adds up in SEZs," said Nation Awakening Party (PKB) faction spokeswoman Saidah Saliwan.

Legislators expect to pass the bill by October next year, when their tenure ends, and hope the bill to be fully implemented within three years after their endorsement.

The government has declared Batam, along with Bintan and Karimun, as an SEZ, and is planning to establish 14 other SEZs around the country, including in Bali, Makassar, East Java and North Sulawesi's Bitung Island.



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