Batam bills leave govt, House split<\/p>\n
Zakki P. Hakim and Rendi A. Witular, Jakarta<\/p>\n
The deliberation of bills on Batam by the House of
\nRepresentatives and the government is likely to be protracted,
\nwith a possibility of not being completed during the current
\nsession, given their different stances over fundamental issues
\nsuch as the exclusive status of the island and taxation.<\/p>\n
Meanwhile, a further delay in defining Batam's status is
\nfeared to harm the investment climate on the island -- one of the
\nmost modern investment destinations in the Asia Pacific.<\/p>\n
The House and the government have each proposed separate
\nbills, the first time that such an instance has occurred. A bill
\nis usually proposed by either the government or the House.<\/p>\n
The House, which is empowered under the Constitution to draw
\nup a bill, completed its draft several years ago. However, the
\ngovernment refused to deliberate it and instead drafted its own
\nversion, which was completed several months ago.<\/p>\n
On the issue of Batam's status, the government proposes the
\nfree trade zone (FTZ) status be accorded only to certain
\nindustrial areas on the island as \"enclave FTZs\", while the House
\nrecommends Batam Island be granted full FTZ status.<\/p>\n
\"There are several differences between the government and the
\nlegislators in their perspective on the FTZ status for Batam, but
\nthey are not that significant,\" Director General of Law and
\nRegulation Abdul Gani at the justice ministry told The Jakarta
\nPost on Friday.<\/p>\n
Abdul said during the deliberation, which will start next
\nweek, the government and the House would push for their own bills
\nand try to seek a compromise on every article.<\/p>\n
\"I can assure you that, despite the differences, we can speed
\nup the deliberation to just 12 working days, (and enact the bill)
\nbefore the tenure of the current administration ends on Oct. 20,\"
\nhe said.<\/p>\n
The government and the House are also split on tax and duty
\nexemption facilities for the island. The government's draft
\nproposes that the facilities should be enjoyed only by those
\nselect parties that conduct business activities on the island.<\/p>\n
The House draft, on the other hand, offers broader tax and
\nduty exemption facilities, including consumer goods for
\nresidents.<\/p>\n
The two institutions agreed on Thursday to start deliberations
\nwith each side referring to their own bill. The government has
\nappointed officials from the justice, finance, trade and home
\nministries as its representatives.<\/p>\n
A FTZ status will enable companies on the island to import
\ngoods without paying customs duties or taxes, depending on their
\neventual distribution, transshipment or reexportation.<\/p>\n
Batam, located only 20 kilometers from Singapore, was declared
\na bonded zone in 1978. After decades of operation, however, the
\nisland runs more like an FTZ, as local authorities provide
\ngreater tax incentives to investors in a bid to boost investment.<\/p>\n
With the new bills up for deliberation, existing investors are
\nworried that the government might change the FTZ benefits they
\nenjoy.<\/p>\n
In order to revive the flagging investment sector, the
\ngovernment has been under pressure to grant Batam an FTZ status,
\nbut has not succeeded in drafting the law due to points of
\ndisagreement between ministries.<\/p>\n
The two Batam bills<\/p>\n
Government bill:<\/p>\n
-- Dissolve current Batam Industrial Development Agency and
\nreplace with Batam Developer Agency<\/p>\n
-- Designate Batam, Rempang and Galang islands as FTZ areas<\/p>\n
-- Designate Batu Ampar, Batam Center, Kabil, Muka Kuning,
\nSagulung, Tanjung Uncang and Sekupang as FTZ industrial zones<\/p>\n
-- Batam Developer Agency authorized to issue regulations for
\nisland<\/p>\n
-- Batam Developer Agency authorized to regulate rates for
\nseaport\/airport services and facilities, infrastructure and
\nexport\/import services<\/p>\n
-- Financial reports from Batam Developer Agency is subject to
\nannual audits<\/p>\n
-- Tax and duties exemption facilities to be granted for select
\nbusiness activities<\/p>\n
House bill:<\/p>\n
-- Maintain current Batam Industrial Development Agency<\/p>\n
-- FTZ areas: Batam, Rempang, Galang and Belakang Padang islands<\/p>\n
-- FTZ industrial zones to be designated later by government
\nregulation<\/p>\n
-- Batam Industrial Development Authority is sole institution
\nwith regulatory powers<\/p>\n
-- Tax and duty exemption facilities to be granted for certain
\nbusiness activities and residents<\/p>",
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