Mon, 10 Jul 2006

Government to draft law on special economic zones

The Jakarta Post, Jakarta

The government is planning a new law to legalize the creation of special economic zones (SEZs) in the country, Coordinating Minister for the Economy Boediono said during the weekend.

Boediono said references to SEZs would also be included in the new taxation and customs laws.

"We want a special law (for the SEZs). We haven't decided on the name yet," he told

Boediono said a special government team has been assigned to draft the new law. The team would study similar laws being implemented in other countries as a comparison, he said.

Last month, Indonesia and Singapore signed a cooperation agreement to turn Batam, Bintan and Karimun islands, all in the Riau Islands province, into SEZs.

The government has said the cooperation would benefit the two economies in the long run. Singapore, which has established similar free trade zones with China and India, wants to expand its economic activities on the three islands in the face of growing competition in the region. Meanwhile, Indonesia is expected to benefit from fresh investment, infrastructure development and Singapore's networking and promotional skills.

If the zones are successful, the government will develop similar SEZs in other parts of the country, possibly with other countries aside from Singapore.

Other regions tipped to become to SEZs include Bali, Makassar, East Java, and North Sulawesi's Bitung island.

Boediono said a steering committee made up of members from Singapore and Indonesia would meet in the middle of this month to assess the implementation of the planned SEZs in the three islands.

The committee would report any problems and possible solutions to the governments of the two countries, he said.

The chairman of the Investment Coordinating Board (BKPM), M. Lutfi, said that the government had yet to decide what new areas would become new SEZs.

He said the creating the law could help the government determine the criteria for deciding whether areas should be developed in this way.