Government decides to adopt 'enclave' FTZ in Batam<\/p>\n
Zakki P. Hakim, The Jakarta Post\/Jakarta<\/p>\n
The government finally decided to maintain the previous
\ngovernment's proposal for an \"enclave\" free trade zone on the
\nindustrial island of Batam, despite potential opposition within
\nthe House of Representatives.<\/p>\n
Coordinating Minister for the Economy Aburizal Bakrie told
\nreporters on Monday that the government decided to limit the free
\ntrade areas to certain places on the island despite the House's
\ndesire to make the whole island a free trade zone.<\/p>\n
However, the minister believes the House will accept the
\nenclave approach.<\/p>\n
\"There will be no conflict at the House,\" Aburizal stated on
\nthe sidelines of the CNBC Strategic Forum entitled \"The New
\nIndonesia 2005: Policy and Action\".<\/p>\n
Aburizal said this government's plan was slightly different
\nfrom the previous one proposed by the Megawati administration.<\/p>\n
The government will free manufacturers within the designated
\nindustrial zones from paying import duties, while those outside
\nthe zones can enjoy the same facility through bonded warehouses.<\/p>\n
He said the government was still making assessments before
\nmaking a decision on whether neighboring Rempang and Galang
\nislands would be able to be complete free trade zones (FTZ).<\/p>\n
During the forum, President Susilo Bambang Yudhoyono said in
\nhis keynote speech that the government had a very good working
\nrelationship with the House.<\/p>\n
\"Vice President Jusuf Kalla's success in being elected leader
\nof Golkar, the largest party in the House, will significantly add
\nmore stability to my government,\" he said.<\/p>\n
Since Kalla took over the reins of Golkar in December, there
\nhas been no real opposition in the house as the party has 128 of
\n550 seats at the House, in addition to the administration's
\nsupport from several medium-sized parties.<\/p>\n
The previous government under Megawati Soekarnoputri and the
\nprevious House failed to reach an agreement on the status of
\nBatam as an FTZ.<\/p>\n
Last September, the House endorsed its bill that granted FTZ
\nstatus to the whole of Batam Island. The bill was opposed by the
\ngovernment.<\/p>\n
Without the government's approval, the law cannot take effect,
\ncreating further uncertainty for investors on the island, which,
\nsince 1978 has been promoted by the government as an industrial
\nbonded zone to attract foreign investors.<\/p>\n
Batam has become one of the most attractive manufacturing and
\nindustrial locations in Southeast Asia, playing host to some 600
\nforeign companies and absorbing over US$3 billion in foreign
\ninvestment.<\/p>\n
The government has argued that extending full FTZ status to
\nthe whole island would cause envy from other regional
\nadministrations that do not have FTZ status.<\/p>\n
As soon as Susilo was sworn in this past October, the
\nSingapore government, which is just a 45-minute ferry ride from
\nBatam, expressed hope that the new government would quickly
\ndecide on the FTZ status of Batam. Otherwise, existing and
\npotential investors would turn away to competing investment areas
\nin China and Vietnam.<\/p>\n
Singapore Foreign Minister George Yeo said Batam had the
\npotential to become a leading industrial center like China's
\nShenzhen within 10 years, but only if the lingering legal
\nuncertainty was quickly resolved.<\/p>\n
Meanwhile, Indonesian Chamber of Commerce and Industry (Kadin)
\nchairman MS Hidayat said the decision to turn all of Batam into
\nan FTZ area or to adopt the enclave FTZ was not an issue for
\ninvestors. It was more important that the status of Batam be
\nclearly defined, he added.<\/p>",
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"sponsor": "Okusi Associates",
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