House urged to finalize FTZ law on Batam
House urged to finalize FTZ law on Batam
The Jakarta Post, Jakarta
Batam Industrial Development Authority (BIDA) chairman Ismeth
Abdullah urged lawmakers to quickly complete the deliberation of
the bill providing Free Trade Zone (FTZ) status for Batam as any
further delay would slow down the flow of new investment into the
island.
Speaking during a press conference, Ismeth said on Tuesday
that the long-awaited law was crucial to providing legal
certainty for investors.
"If the deliberation of the law by the House can't be
completed soon, the flow of foreign investors will decline," he
said.
He hoped that the law would have entered into effect by next
year.
After years of delay, the government passed on the Batam FTZ
bill to the House of Representatives for deliberation a few
months ago. But there are signs that the deliberation process
might be slower than expected as lawmakers will have other
priorities in the run-up to the 2004 general election.
FTZ status would enable companies on Batam to import goods
without paying customs duties and taxes, pending their eventual
processing, transshipment or reexportation.
Batam, located some 20 kilometers from Singapore, is one of
the most modern industrial bonded zones in Asia Pacific.
There are some 650 foreign companies operating on the island
with a combined investment of about US$3.7 billion. Their
existence has provided jobs for 173,000 workers, with a further
70,000 jobs in the informal sector.
The industrial island of Batam was declared a bonded zone in
the 1970s. But after decades of operation, Batam is now more like
an FTZ as the government gives greater tax incentives to
investors in a bid to boost investment. But existing investors
are still worried that the government might suddenly change the
current FTZ benefits particularly considering the fact that the
existing government regulation on fiscal policy for Batam will
expire at the end of this year.
Ismeth said that BIDA had been lobbying the central government
to extend the regulation on fiscal incentives. But to date, the
government has yet to respond to the request.
Some experts have said that turning Batam into a permanent FTZ
would boost its attractiveness in the eyes of investors
particularly as the island is also competing for investment with
Malaysia's Johor, Vietnam's Ho Chi Minh City and China.
They argued that if Batam could attract a large number of
foreign investors, the island could become an engine of growth
for the country's economy as a whole.