Batam's investors want clear policy on island's status: BIDA<\/p>\n
By Devi M. Asmarani<\/p>\n
BATAM ISLAND, Riau (JP): Batam Industrial Development
\nAuthority (BIDA) said on Friday foreign and local investors here
\nwere concerned over the government's seemingly inconsistent
\neconomic policy on the island.<\/p>\n
BIDA deputy chairman for administration and planning Wendy
\nAritenang said the investors questioned the government's
\nsincerity in accommodating their commercial needs, as its policy
\non the industrial island seemed to have been wavering over the
\nlast decade.<\/p>\n
\"A clear policy, especially on the island's status, is the
\nmost important thing for investors, because that will determine
\ntheir estimation of cost structures for their investment here,\"
\nhe said.<\/p>\n
Wendy was referring specifically to a 1998 government
\nregulation on the imposition of value-added tax (VAT) on Batam.<\/p>\n
The 1998 regulation says export-oriented companies will be
\nsubject to receive refunds for the VAT payment only after they
\nprove that they have exported their products.<\/p>\n
Wendy said the investors saw this move as a contradiction to
\nthe previous policy on Batam which had attracted them to invest
\nin this 415-square-kilometer island in the first place.<\/p>\n
\"This move will force them to redo their cost structure,\" he
\nsaid.<\/p>\n
In an attempt to attract investors to the area, the government
\ndecided in 1978 to make Batam, some 19 kilometers away from
\nSingapore, an industrial bonded zone. In later years, several
\nislands near Batam were also included in the bonded zone.<\/p>\n
According to the 1978 regulation, manufacturers on Batam are
\nfree from all import and export duties and \"other government
\nlevies\".<\/p>\n
Wendy said the 1998 regulation, which is due to take effect
\nthis April, was based on the fact that despite its status as an
\nindustrial bonded zone, Batam also has noncommercial inhabitants.<\/p>\n
\"I understand that what the government tried to achieve with
\nthis policy was the sense that justice was being done, that Batam
\nwould be treated fairly like other areas in Indonesia.<\/p>\n
\"But this can have a grave impact on the industry here,\" he
\nsaid, adding that investors saw the move as inconsistent.<\/p>\n
He said foreign investors' on Batam were mainly concerned that
\nthe policy would become an administrative snag for daily business
\noperations.<\/p>\n
\"They are not convinced that they will be able to get their
\ntax return on time and in the full amount, even with the
\ngovernment's promises,\" he said.<\/p>\n
In addition, they are also concerned that the tax imposition
\nwill raise labor costs in the area, he said.<\/p>\n
But the local small and medium enterprises, which make up the
\nexisting supporting industries for Batam's main industries, will
\nbe the most affected by the policy, he said.<\/p>\n
He said the supporting industries, on which the tax would be
\nimposed, could lose businesses to their foreign counterparts as
\nthe VAT would make them uncompetitive.<\/p>\n
\"What we will get in terms of tax income from imposing VAT on
\nBatam is far less than what we actually put at stake here,\" he
\nsaid.<\/p>\n
Wendy said BIDA had proposed the government conduct at least a
\none-year study before recommending any more new economic policies
\non Batam.<\/p>\n
\"We hope to hear (the central government's response) on this
\nproposal pretty soon,\" he added.<\/p>\n
As of November 1998, the combined investment value in Batam
\namounted to US$2.27 billion, compared to about $2.24 billion in
\n1998. Wendy said that on Batam, there are 380 foreign investors,
\nmostly from Singapore, and the number is targeted to increase to
\n750 by 2004, reaching $5 billion in value.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/batams-investors-want-clear-policy-on-islands-status-bida-1447893297",
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"sponsor": "Okusi Associates",
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