Japan unimpressed with RI over FTZ inaction
Fadli, The Jakarta Post, Batam/Jakarta
The Japan External Trade Organization (Jetro), an influential Japanese government agency, said it was pessimistic over Indonesia's stated plan to implement the Free Trade Zone (FTZ) in Batam.
The pessimism was expressed by Jetro's senior investment advisor Saburo Izumi on Thursday during a visit to the industrial island to promote investment inflows into the country.
Based on the agency's talks with a number of sources in Jakarta, Saburo said that Jetro was upset that the FTZ implementation did not look likely in the near future.
While highlighting the importance of the FTZ status in luring more investment to the island, the uncertainty in the process has begun creating a lot doubt on the part of investors, especially Japanese, he added.
Despite that the Indonesian government's expressed commitment to the plan, the progress in the drafting of a law which will grant the island the FTZ status has been too slow.
The National Economic Recovery Committee (KPEN) has repeatedly criticized the slow progress in the drafting, saying that the much-anticipated law was very important to strengthen legal certainty for investors interested in Batam.
An FTZ status would enable companies on Batam to import goods without paying customs duties and taxes, pending their eventual processing, transshipment or export.
The island is home to hundreds of export-oriented manufacturers, mostly international companies.
The industrial island 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-like benefits. In a bid to attract more investment, a law has been drafted to make the FTZ status legal and permanent.
Elsewhere, Saburo said that, of the total 1,100 Japanese companies operating in Indonesia, 52 of which are in Batam with a total investment value of US$429 million.