Batam prospering during crisis<\/p>\n
Dadan Wijaksana, The Jakarta Post, Singapore<\/p>\n
While Indonesia still reels from falling foreign direct
\ninvestment (FDI), investors flocking to Batam helped push the
\ntiny island's economy up by an impressive 7.7 percent last year,
\nfar above the national growth rate of 3.32 percent.<\/p>\n
According to Batam Industrial Development Authority (BIDA)
\nChairman Ismeth Abdullah, investors still see the island as an
\nattractive place to invest in, not only because of its sound
\ninfrastructure facilities, but also its probusiness policies.<\/p>\n
\"Not only do we have a one-roof-policy for investment
\napplications, but we also provide a fast and efficient customs
\nservice for imports and exports at seaports and airports.<\/p>\n
\"Batam also offers attractive tax incentives, such as
\nexemptions from import\/export taxes, value-added tax and sales
\ntax on luxury goods. Beside, foreign investors have options of
\nhaving 100 percent ownership,\" Ismeth said here last week.<\/p>\n
He was speaking at a one-day seminar on investment in Batam in
\nSingapore.<\/p>\n
Unlike other parts of the country where direct investment has
\nbeen rare, the island remains the country's growth engine by
\nattracting more and more investors.<\/p>\n
After absorbing a staggering US$15.4 billion of FDI in 2000,
\nthe country experienced a sharp decline last year, with only $9
\nbillion worth of foreign investment coming in.<\/p>\n
Of last year's figure, some $3.4 billion went to the island,
\nwith Singaporeans making up some $1.2 billion.<\/p>\n
Batam has become the country's main center of industry, where
\n70 percent of the economic growth is contributed by an export-
\noriented manufacturing sector, with 100 percent of its products
\nexported to international market.<\/p>\n
The total value of exported goods from the island last year
\nreached US$ 5.7 billion, or accounted for some 14 percent of the
\ncountry's total non oil and gas export revenue.<\/p>\n
Today, there are .... from 34 countries doing business on the
\nisland, investors from Singapore being largest group, with a
\ntotal of 266 companies active in various industries, services and
\nthe tourism sector.<\/p>\n
With such a significant figure, it is thus crucial for the
\nisland's authority to sustain the flow of investment from
\nSingapore.<\/p>\n
To attract more investors, it was revealed in the seminar,
\nBIDA is planning to implement various measures to accommodate the
\nneeds and requirements of future investors.<\/p>\n
Ismeth said the new commitments were designed to provide
\nworld-class support and treatment for potential investors, and
\nalso to provide service for all actual foreign investors in
\nBatam.<\/p>\n
First, the establishment of the Foreign Investors' Center to
\nensure a prompt and comprehensive service. Secondly, a Charter
\nfor Foreign Investors as a formal public pledge to meet or exceed
\nspecific service standards in BIDA.<\/p>\n
The third would be the setting up of an office of the
\ninvestment ombudsman as an independent institution, to be
\nresponsible for investigating and resolving difficulties faced by
\ninvestors.<\/p>\n
Ismeth said the program would be launched at the same time as
\nthe official launching of the Free Trade Zone (FTZ) status of
\nBatam, which he expected to be soon.<\/p>\n
The government plans to grant Batam long-anticipated FTZ
\nstatus, with the FTZ draft law currently being debated in the
\nlegislature.<\/p>\n
FTZ status would enable companies on Batam to import goods
\nwithout paying customs duties and taxes, pending their eventual
\nprocessing, transshipment, or reexport.<\/p>\n
Batam, located in the Riau archipelago, some 20 kilometers
\nsouth of Singapore, was initially declared an industrial bonded
\nzone in 1978 to attract foreign investment and bolster export
\ncompetitiveness.<\/p>\n
When asked about the impact of the deteriorating relationship
\nbetween the governments of Indonesia and Singapore on the flow of
\ninvestment from Singapore to the island, Ismeth said he had yet
\nto see such an impact.<\/p>\n
He said he was convinced that Singaporeans would still
\nperceive Batam to be as attractive as ever in term of investment,
\nregardless of what happened between the two neighboring
\ncountries.<\/p>\n
\"So far, it has had no effect at all. Investors are still
\nflowing, traffic between the two islands is as busy as ever.
\nThere is nothing serious in terms of investment, business and
\ntrade,\" he said.<\/p>\n
His comments came at a time when political tension between the
\ntwo ASEAN countries has been on the rise, following remarks by
\nLee Kwan Yew, Singapore's senior minister, saying that Indonesia
\nhad done little to combat terrorists.<\/p>\n
He even said Indonesia was believed to be a hiding place for
\nthose linked with international terrorists.<\/p>\n
The remarks have drawn fire from Indonesians, with the
\ngovernment and certain groups in society asking for a
\nclarification of the issue.<\/p>\n
Thus far, there has not yet been any official settlement of
\nthe row in any form.<\/p>\n
Apparently sharing Ismeth's view, chairman of the Singapore
\nConfederation of Industries Robin Lau suggested that investors
\nlook at other angles.<\/p>\n
He urged businessmen not to back down from investing in the
\nisland just because of the issue.<\/p>\n
\"As businessmen, we should look at opportunities. Batam is
\nindeed close to Singapore and has plenty of competitive
\nadvantages; why don't we seize that opportunities?\" he told the
\nseminar.<\/p>\n
Rather than backing down, he added, investors should instead
\nmove on by relying on the essential business principle: the
\nhigher the risk, the higher the gain.<\/p>",
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