Govt agrees to include Bintan in U.S.-S'pore trade pact

Dadan Wijaksana, The Jakarta Post, Jakarta

The government has agreed in principle to include Bintan island in the proposed Free Trade Arrangement (FTA) being negotiated between Singapore and the U.S, under which IT products made in Bintan will enjoy duty-free access to the American market.

Minister of Trade and Industry Rini Soewandi said on Thursday the broad trade pact, if finalized, would benefit Indonesia in terms of luring foreign investors particularly to Bintan, which lies very close to Singapore.

"The government has basically agreed to the idea, which we think, would lure more investors to (Bintan) island to set up companies," Rini told reporters on the sidelines of a one-day seminar on the ASEAN Free Trade Area (AFTA).

Aimed at making the island a manufacturing base for IT (information technology) products, the idea was the subject of a discussion between Rini and her Singaporean counterpart George Yeo during his five-day visit to the country this week.

Yeo said that if the plan works with IT products it could be broadened to other products in the future.

Rini however warned there were conditions that Indonesia had to meet first if Bintan were to join the pact.

Talks to determine all the requirements are still underway, she said, but the main prerequisite is that it should be able to provide security for the investments.

The two countries would set up a joint working group to review the investment climate in Bintan, particularly in relation to security, labor, taxation, customs and immigration problems.

While it was reported that the U.S. welcomes the plan, Indonesia still has plenty to do to catch up.

Aside from providing security, the government would also need to provide professionals in the customs and tax sectors, as well as in labor management, in a bid to speed up the economic process.

The government also has to set up a council comprising employers, workers and government officials to promote industrial harmony and form a private sector-led international advisory panel.

The island of Bintan, just an hour ride by ferry from Singapore, currently has an industrial estate, hosting 28 Singaporean and other foreign firms.

Meanwhile, an economist welcomed the plan as long as it contributed to the country's economy as a whole, such as absorbing workers.

"As long as it includes production activities, which will have good effect on the economy, and the transfers of knowledge and technology, I think the plan is positive.

"The important thing is, how this will accelerate our economic activity, thus having a good impact on our GDP," Bustanul Arifin of the Institute for Development of Economics and Finance (Indef) said, referring to growth in gross domestic product terms.