Thu, 06 Feb 2003

Batam to sign pact with JICC

Fadli, The Jakarta Post, Batam

The Batam Industrial Development Authority (BIDA) will sign a memorandum of understanding (MoU) with the Japan Chamber of Commerce and Industry (JICC) in Singapore to promote the island as an investment destination for Japanese investors.

Under the MoU, which will be signed on Feb. 13 in Batam, both agencies will agree to share data and information, to cooperate in organizing trade and investment missions and to encourage JICC members to invest in Batam, BIDA's chairman Ismeth Abdullah said on Tuesday.

Ismeth said despite the growing popularity of China as an investment destination in the region, Batam could still offer a good alternative for Japanese investors, given its well- established infrastructure and relatively cheap labor.

Furthermore, he said, the planned free trade agreement (FTA) between Singapore and the U.S. had increased the island's attractiveness to investors. Under the FTA, all products manufactured in Batam and the adjacent island of Bintan would be exempt from import duties in the U.S.

The agreement with JICC will add to the number of pacts signed by BIDA with Japanese business associations.

Last October, BIDA signed MoUs with four Osaka-based associations -- the Kansai Economic Federation (Kankeiren), Japan Indonesia Business Association of Kansai (Jibak), Association for Medium and Small Enterprises of Fukui Prefecture and the Osaka Business Partner City Council -- to promote Batam as an investment destination for the associations' members.

Today, 130 companies operate in Japan, all JICC members, according to BIDA's data.

Ismeth said BIDA had also asked to clinch a similar agreement with Japan's powerful trade body JETRO, but the agency only agreed to seek "informal" cooperation.

When asked for comments on Batam's prospects, Shawada Shugo, a senior advisor with the Japan International Cooperation Agency (JICA) told The Jakarta Post that most Japanese investors still preferred to invest in China, due to its proximity to Japan and its huge market potential.

However, they also saw Batam as an profitable place for investment, especially given that the island was included in the Singapore-U.S trade pact.