As the problems hampering the development of special economic zones (SEZs) in Indonesia remain unresolved, speakers at a discussion forum have urged the government to act quickly as the establishment of similar zones in neighboring countries was proceeding apace.
"Quick action is needed due to the increasing competition from other SEZs and the availability of alternative investment destinations," Singapore Chamber of Commerce secretary Mark K. Y. Wong told the discussion on SEZs Wednesday.
Wong said that Singaporeans were actually keener to cooperate with the Malaysian authorities in an SEZ development in Johor.
"The political structure in Malaysia facilitates faster action," Wong said.
The forum, which was organized jointly by the Riau Islands government and the Investment Coordinating Board (BKPM), highlighted several issues and challenges hampering SEZ development in Indonesia.
These included overlapping permits and regulations issued by the local and central governments, inadequate infrastructure in Bintan and Karimun, bureaucratic delays, lack of security, rampant piracy, harassment by officials, land-rights issues, lack of business incentives and labor problems.
"The labor issue is at the top of the list. As we have seen, it is the main reason why a number of factories have closed down in Batam."
Between January and June of this year, it has been reported that at least six firms closed up shop in Batam and Bintan, putting more than 8,000 people out of work.
The six firms said they had been suffering losses for the past several years due, in part, to unfavorable government policies, particularly as regards labor issues.
Batam, along with Bintan and Karimun, was declared an SEZ due to its strategic location near Singapore.
As part of the effort to develop SEZs in Indonesia, the government has established a one-stop investment office offering integrated services in the licensing, immigration and tax fields.
However, Wong said, "So far there is one door, under one roof, but no one-stop service"
Riau Islands governor Ismeth Abdullah said that his administration and the central government were working on a number of fronts to help overcome the obstacles currently faced.
"The (central) government is preparing a regulation in lieu of a law governing SEZs, which will provide better and faster customs and immigration processing, better incentives and tax arrangements, and more business friendly labor management," Ismeth said.
We will protect companies as regards labor problems. We will manage the manpower situation so as to ensure greater productivity," he said.
The government is planning to establish 14 other SEZs around the country, including ones in Bali, Makassar, East Java and North Sulawesi's Bitung Island.
Commenting on the plan, former American Chamber of Commerce in Indonesia president James Castle said that considering other countries had between 30 and 40 SEZs, a geographically big country like Indonesia could have more.
"But it depends, you would have to be able to deliver on your promises," he said pointedly.