Batam's status deters investors
Batam's status deters investors
Sari P. Setiogi, The Jakarta Post, Jakarta
A further delay in granting Batam free trade zone (FTZ) status
has created legal uncertainty on the industrial island, experts
said.
These experts claim investors have begun to pull out of the
island or to cancel new investment plans.
"This (continuing delay) makes Batam an island with no legal
status. That is why we urge the government to grant FTZ status
for Batam as soon as possible," said Heri Muliono of the Research
Institute for Batam at a seminar here on Tuesday.
Abdoellah Gosse of the Batam office of the Indonesian
Employers Association said that last year, a foreign company with
a huge investment in Batam decided to pull out from the island
due to the uncertainty over the free trade zone status.
He also said another company planning to build a plant on
Batam put its plan on hold for the same reason.
After years of delays, the government recently submitted to
the House of Representatives for deliberation a draft law on free
trade zone status for Batam.
There has been concern, however, that lawmakers will be unable
to complete the deliberations for some time because they will be
busy with the upcoming elections.
Free trade zone status will enable companies on Batam to
import goods without paying customs duties and taxes, pending
their processing, transshipment or re-exportation.
Batam, located some 20 kilometers from Singapore, is one of
the most modern industrial bonded zones in the Asia Pacific.
There are some 650 foreign companies operating on the island
with a combined investment of about US$3.7 billion. These
companies provide jobs for 173,000 workers, with a further 70,000
jobs in the informal sector.
The industrial island of Batam was declared a bonded zone in
the 1970s. But after decades of operation, Batam has become more
like a free trade zone, as the government has given greater tax
incentives to investors in a bid to boost investment.
However, investors are concerned the government could change
the current FTZ benefits, particularly considering that the
existing government regulation on fiscal policy for Batam will
expire soon.