Head of Batam Authority:

Head of Batam Authority: "We offer the best for investors"

Since the establishment of Batam as an industrial, trade and tourism zone, it has become more well-known and has attracted numerous foreign investors. This is due to Batam's superior features, such as its strategic location, modern infrastructure, efficient services, sufficiency of manpower, competitive costs of investment and production, professional management and bonded- zone tax incentives, comprising exemption from value-added tax, sales tax and customs duty.

All these have contributed to the improvement of Batam's economy year by year and have turned Batam into one of the country's growing economic centers. During the period 1990 to 1992 Batam experienced a most fantastic growth rate of 28.01 percent, which was triggered, among other things, by the formation of the Indonesia-Malaysia-Singapore Growth Triangle (IMS-GT). Ever since, more and more foreign companies invested on the island. Even during the 1998 economic crisis, the Batam economy positively grew at the rate of 3.08 percent, while, in contrast, other regions in the country suffered a decrease of 13 percent.

Thanks to God Almighty, we have been able to maintain this favorable growth, based on our cooperation with all parties concerned and every element in the community. Batam has remained solid and unaffected by anything that could disrupt its economic activities. This is one of the reasons Batam is one of the most competitive industrial zones in Asia Pacific. New additional foreign investments as of October 2002 comprise 74 companies. Batam has therefore surpassed its target of 70 foreign investment companies for 2002.

However, with Batam's status merely as a bonded zone, we feel that it does not provide sufficient legal certainty for the continuance of existing investors. An inadequate legal status could be a threat and cause these foreign investors -- currently totaling 531 -- to leave Batam, which would cause unemployment. At present Batam is home to some 160,000 workers and the island has largely contributed to the growing economy of its surroundings. Workers in Batam transferred to their various hometowns no less than Rp 125 billion in 2001.

These are some of the reasons why Batam wants the government to issue the relevant law and officially declare the island a true Free Trade Zone (FTZ), as it is de facto already very much like a Free Trade Zone anyway. Everyone on the island, including the executive, legislature, businesspeople and NGOs, are working together for Batam to obtain clear legal status under the umbrella of FTZ law. Our aim is to enable Batam to accommodate a larger number of foreign investors, targeted to reach 800, to absorb greater manpower and improve the welfare of its hinterland. Batam must become a zone with more superior and competitive features in the Asia Pacific area.

The law on free trade and free port (FTZ Law) will create legal certainty for foreign investors in all aspects of economic activities both for the present and in the future. With the existence of this umbrella law, it will be easier for the government to decide on other strategic steps and policies to speed up development in Batam and its hinterland for the benefit of the national economic recovery.