Govt criticized for slow progress in drafting Batam FTZ law

Govt criticized for slow progress in drafting Batam FTZ law

The Jakarta Post, Jakarta

The government is being criticized for the slow progress in
drafting a law on Free Trade Zone (FTZ) status for Batam.

Sofyan Wanandi, chairman of the National Economic Recovery
Committee (KPEN), said that the much-anticipated law was very
important to strengthen legal certainty for investors interested
in Batam.

"If this issue is not settled immediately, how can we lure
investors to Batam?," Sofyan asked on Tuesday during a seminar
with the Batam Industrial Development Authority (BIDA),
investors, and government officials. The event was held at the
headquarters of the Centre for Strategic International Studies
(CSIS), a respected private think-tank.

The industrial island of Batam was declared a bonded zone area
in 1978. But after decades of operation, Batam is now more like
an FTZ as local authorities give greater tax incentives to
investors in a bid to boost investment activities. But existing
investors are still worried that the government might suddenly
change the current FTZ benefits. In a bid to attract more
investment, the government has been under pressure to draft a law
which would make the FTZ status legal and permanent.

But for years the government has failed to complete the
drafting of the law.

An FTZ status would enable companies on Batam, located some 20
kilometers from Singapore to import goods without paying customs
duties and taxes, pending their eventual processing,
transshipment or reexportation.

The island is home to hundreds of Singaporean manufacturers
and other foreign firms.

Sofyan asserted that the government would have to make the
issue a top priority so that investors feel secure, thereby
making Batam a prime mover for the country's economy.

Benny Pasaribu, a legislator from the Indonesian Democratic
Party of Struggle (PDI Perjuangan) said the House of
Representatives would prioritize the deliberation of the draft
law on Batam FTZ during the next House session.

"The House fully supports an FTZ in Batam and it will be high
on our agenda in the next session," he said.

Jinny Charles Katuuk, deputy director of Fiscal and Economic
Decentralization and Infrastructure Development at the Office of
the Coordinating Ministry for Economic Affairs said that the slow
progress in drafting the law was because the government was still
trying to get more input.

"The government wants to make sure that it has all the
opinions from all parties concerned ... so nothing will be left
out during the deliberation process with the House," Jinny said.

The Coordinating Ministry of Economic Affairs is in charge of
designing policy for the island.

According to Jinny, the draft is now at the Ministry of Law
and Human Rights pending deliberation at the House.

"We're ready whenever the House summons us to discuss the
draft," Jinny said.