Approaching the enforcement of the Law on Free Trade and

Approaching the enforcement of the Law on Free Trade and
Harbor Zone in Batam, the island's infrastructure is increasingly
being geared toward readiness for the free trade zone. To ensure
the success of Batam as a free trade zone, seaports, airports and
roads are absolutely needed.

The Batam Authority (BO), which has been entrusted by the
central government to manage Batam island over the past 30 years,
has successfully prepared these vital facilities to face open
competition.

Seaports

Batam island alone, measuring some 415 square kilometers and
expanding to 715 km2 when Rempang and Galang islands are
included, boasts seven seaports in Galang island, Telaga Pungu,
Nongsa, Marina, Sekupang, Kabil and Batu Ampar. The last three
are cargo seaports.

Insan Kamil, the administrator of the seaport office, said his
office had prepared two regulations for the seaports in the
liberalized trade era. One of the regulations deals with the
stipulation of a seaport working sphere (DLKP) and the other is
concerned with the seaports' interest sphere (DLKL). These
regulations are aimed at isolating seaports from activities
beyond their working or interest spheres.

This policy has been adopted because the Batam seaport
administrator wishes to help the users of seaports, particularly
investors.

"A jump from one policy will never occur drastically, but only
in phases. We are now preparing and planning concepts that will
balance these gradual changes. One of our plans is the DLKP and
DLKL," Insan Kamil said.

Talking about cargo ports in Batam, Batu Ampar has been made a
cargo seaport and is a priority of the seaport management. At
present Batu Ampar, which has an open-air warehouse measuring
214,000 m2, is bigger than the other two cargo ports. The docking
capacity at this port is 35,000 dead weight tons (DWTs), while
its length is 1,250m.

The port capacity, Insan Kamil said, will continue to be
improved by ensuring that the existing facilities are maximized.

And the port management prioritizes security over other
matters. Security is the most important factor in allowing
investors to conduct business comfortably in Batam. Cooperation
with the police and the Batam Authority's Protection Directorate
(Ditpam), a unit assigned to safeguard the assets of the Batam
Authority, is part of the all-out effort to prevent any incidents
in a port area.

Kabil Port: This port is located in Nongsa district, some 30 km
from the center of the Batam city of Nagoya. With a docking
capacity of 35,000 DWTs, this port can handle vessels with a big
loading capacity. The port itself is specially used for palm oil
and crude palm oil (CPO). As it is located quite far from the
city center, it provides greater comfort and is ready to
accommodate specific activities in the port sector.

This port also has an open-air warehouse measuring some
100,000 m2 and a closed warehouse of 1,890 m2. The pier is 420 m
long. With these facilities and capacities, Kabil port is really
ready to serve as a busy cargo port.

Sekupang Port: This seaport is dominated by wooden vessels
carrying electronic equipment from Singapore to be sold in Batam.
However, it is not as busy as the two seaports in Singapore.
Sekupang now has a docking capacity of 10,000 DWTs and a 177
meter-long pier. The port is also provided with an open-air
warehouse measuring 116,110 m2 and a closed warehouse measuring
42,240 m2.

"A seaport is in fact a bonded or free trade zone and must be
integrated with the management of an industrial estate.
Factually, this has happened and we are ready to prepare the
legal instruments," said Insan Kamil.

He added that the ports in Batam had been opened up to various
activities with a multiplier effect related to multiplayers, as
evident by mounting port activities favorably influencing other
sectors outside the ports. This can only mean that the ports are
being well managed.

"Batam island has proven that its multiplier effect has
brought to life other sectors, something we ought to be grateful
for," Insan Kamil added.

Airport

Hang Nadim, named after a famous Malay general in 1511-1528,
has been immortalized as the name of Batam's airport. The
airport's 4,025-meter runway is the longest in Southeast Asia. It
is longer than the runway at Soekarno-Hatta airport, which is
only 3,650 meters long, and is slightly longer than the 4,000
meter-long runway at Singapore's Changi airport.

Located on a 1,600-hectare lot, Hang Nadim airport currently
serves 16 domestic routes. Ten of its daily destinations include
Jakarta, Jambi, Padang, Solo, Pekan Baru, Medan and Surabaya,
which are served by various airlines, including: Garuda Indonesia
Airways, Pelita Air, Jayayu, Mandala Airlines, Lion Airlines,
Bouraq and Merpati Nusantara.

Hang Nadim airport chief, Imam Soelvan, said that there were
several programs to enhance the airport's facilities in the free
trade zone.

The first program is to maximize its capacity. As airport
number three, after Soekarno-Hatta and Ngurah Rai, Hang Nadim
airport has been actively promoted to domestic and international
airlines. A positive result of this promotion was China Airlines'
inclusion of Hang Nadim as one of the airlines' destinations.
Another foreign airline, Asia Air, also has a similar plan in the
near future.

The next program is to turn it into an airport, complete with
shopping centers. "Only major international airports have them.
This program should be realized within four months at the most,"
Imam Soelvan said.

To support Batam as an industrial zone, the airport also
serves international cargo flights from Up Flight Cargo
International. The Batam-Hong Kong route is served by Mandala
Airlines using A 300 planes three times a week. Smaller craft are
used by Sabang Marauke Air Charter (four times daily) and
Condiction Air (twice daily) for the cargo sent to Singapore.

"Batam's Hang Nadim airport has also been included in the
Bilateral Agreement by the central government to make it a
destination for international airlines. This is in relation to
the current high demand, which makes Hang Nadim airport quite
competitive compared to Singapore's, Kuala Lumpur's and Bangkok's
airports," assured Imam Soelvan.

The airport was awarded the ISO 9002 Certificate by Lloyds
Quality Insurance in April 2002 for Quality Management System,
which is evaluated every six months.

"Hang Nadim is the only Indonesian airport to receive this
certificate and naturally we'll do our best to maintain it," Imam
Soelvan said.

The airport, which is equipped with the latest rampways for
passengers' access to aircraft, is currently handling 3.3 million
passengers annually. Only two other airports in Indonesia also
have these sophisticated rampways: Soekarno-Hatta airport in
Jakarta and Ngurah Rai airport in Bali.