Bintan a new rising star for investment

Bintan a new rising star for investment

By Johannes Simbolon

JAKARTA (JP): In a relatively short time, Bintan Island in the
Riau archipelago has turned itself into a burgeoning center for
investment activities in Indonesia and Southeast Asia.

Since the Indonesian and Singaporean governments signed an
agreement to develop the island in 1990, money has been pouring
in to make it ever more beautiful, industrious and rich.

More than a dozen investors have and will continue to set up
factories in the industrial park in the south of the island.

And international hotels and cottages, and golf courses have
been built along the wonderful white beaches to the north.

Singapore's Prime Minister Goh Chok Tong expressed his big
hopes for the island at the opening of the Bintan Beach
International Resort (BBIR) in June last year: "Bintan will
achieve success as the bright star among the tropical island
resorts in Asia."

Minister of Industry and Trade Tunky Ariwibowo recently said
that Bintan was a showcase of the successful bilateral
cooperation between Indonesia and Singapore, in which both
countries complemented each other in their shortcomings and plus
points.

He said Singapore had a lot of capital but lacked the land,
labor and natural resources needed for large businesses.

As a major air transportation hub in Asia, the country draws
millions of visitors each year but has few tourist attractions to
keep them there for long.

Indonesia, on the other hand, is rich in natural resources,
manpower and potential tourist attractions but lacks the capital
to develop them.

Bintan's proximity to Singapore should be a special attraction
for investors. It has a population of 200,000 and is
approximately 1,030 square kilometers in size (about one a half
times the size of Singapore).

It is 50 kilometers southeast of Singapore and can be reached
in one hour by ferry from Singapore and less than a half an hour
by ferry from Batam Island, Indonesia's largest industrial zone.

They key mover behind investment in Bintan is the widely
diversified Salim Group.

The group developed Bintan Beach International Hotel on 23,000
hectares in a consortium with Riau's provincial administration,
the Indonesian navy, and a group of Singaporean investors.

The Indonesian group owns 60 percent of the project (Salim 80
percent, the Riau administration 12.5 percent and the navy 7.5
percent). The 40 percent belongs to Singapore Technologies
Industrial Ltd, the Development Bank of Singapore, Overseas-
Chinese Banking Corporation, Overseas Union Bank, UOL Equity
Investment, Straits Steamship Ltd, Tropical Resorts and KMP
Bincorp Investments.

With a total investment of S$3.5 billion, the consortium has
managed to turn the swamps and jungle along the island's northern
beaches into a posh tourist resort.

Hotels already operating in the resort include the Rasa Indah,
Sedona Bintan Lagoon, Bintan Lagoon Beach and Resort, Club Med
Bintan, Laguna Bintan, Banyan Tree Bintan, Mana Mana Beach Club,
Mayang Sari Beach Resort and Nirwana Garden Resort.

The management plans to have 14 hotels with 3,500 rooms there
by 2000. It wants 1.5 million tourists to visit the resort each
year.

Salim together with Singapore's Technologies Industrial
Corporation and JTC International is also developing Bintan
Industrial Estate (BIE) on 4,000 hectares in the south.

BIE director Handoko Adiwinoto said the estate was initially
designed to accommodate labor-intensive industries like clothing
and furniture, to avoid competition with Batamindo Industrial
Park in Batam, which was designed for electronic, high-tech
investment.

Many Singaporean investors already operate in Batam, which has
been developed as an investment center since the 1970s, much
earlier than Bintan.

BIE has attracted ten clothing and furniture investors from
Singapore since the estate construction began in 1993.

Problems developed, Handoko said, when the United States
imposed the Indonesian quota, instead of the Singapore quota, on
clothing produced in Bintan from July last year.

BIE's management took quick steps to reposition itself by
moving to high-tech industries, like electronics.

Within a year, it had attracted eight electronics tenants from
Singapore and Japan with a total investment of S$100 million.

They include semiconductor maker PT Yoshikawa Electronics
Bintan, a subsidiary of Japan's Yoshikawa Group; loudspeaker
manufacturer PT Foster Electric Indonesia, owned by Japan's
Foster; audio component maker PT HT Bintan, a subsidiary of
Singapore's Hong Guan Technologies; cash drawer assembler PT GP
Technology Bintan, a subsidiary of Singapore's German Plastic
Technology Pte Ltd; cleaning equipment maker PT Esco Bintan
Indonesia, a subsidiary of Singapore's Esco Holding Pte Ltd;
leadframe manufacturer PT Sumiko Leadframes Bintan, a subsidiary
of Japan's Sumitomo Metal Mining Co. Ltd; collets maker PT Bon
Mark Indonesia, owned by Japan's Bon Mark Co. Ltd; and disc drive
component maker PT D'Mac Indonesia, an affiliate of Singapore's
D'Mac.

Handoko said investors enjoyed a number of investment
incentives including duty-free importation of raw materials and
equipment, and chance to sell up to 20 percent of their products
on the domestic market.

Investors are also attracted by the 80-year land lease to
foreigners rule.

"BIE also provides a one-stop service for investors to process
all their licenses as quickly as possible," Handoko recently said
at a ceremony to inaugurate the entry of several new BIE tenants.

Sources at BIE said some of the eight electronic companies had
been operating on Batam but expanded to Bintan because land
leases and labor costs were cheaper.

Handoko said the Salim group was also developing a giant
drinking water project on the island with a production capacity
of 550 million gallons a day.

Abut 400 million gallons a day will be exported to Singapore
which thus far imports drinking water from Malaysia's Johor
state.

"The drinking water project is strategic because Johar has
warned Singapore that it would stop unprocessed water to the
country," said Handoko.

Jungle and swamps are still visible on Bintan. But, in view of
the rapid development, Bintan will look very different some years
from now.

"What we are doing now on the island is giving hope to the
local people. A hope for a bright future," Tunky said recently.