Wed, 19 Mar 2003

Japan urges Batam to improve investment climate

Fadli and Dadan Wijaksana, The Jakarta Post, Batam/Jakarta

Japanese investors urged the authorities at Batam industrial island to improve the investment climate and intensify promotion there, as competition with China in attracting foreign investment was becoming tougher than ever.

Yasudo Heihachi, head of the Japan Small and Medium Enterprise Consultants Association (J-SMECA), said on Tuesday in Batam that more and more Japanese investors were turning to China due to a variety of incentives offered by the latter.

He added that overseas promotion was also essential in boosting the awareness of Japanese investors on the potential of Batam.

"Moreover, this year has been declared a promotional year for ASEAN," he said on the sidelines of a memorandum of understanding (MOU) signing ceremony between a visiting Japanese trade delegation and the Batam authority.

Yasudo was leading a 30-strong business delegation to take a closer look on how businesses were run in the island.

The MOU covers efforts to improve investment, which includes exchange of information and data on trade and investment and business promotion between Japan and Batam.

Benyamin Balukh, of the Batam Industrial Development Authority (BIDA), welcomed the suggestions, saying that Batam had always regarded highly the needs of its investors, including those from Japan.

However, as there were already plenty of incentives for investment in Batam, what needed to be done was increasing promotional activities, he said.

"Batam already offers plenty of stimulus for investors, including those from Japan. Not only are their export-oriented products free from customs charges and luxury taxes, but investors here have enjoyed competitively priced means of production.

"They have access to relatively cheap land in a location that is close to Singapore, which is quite an advantage. In addition, our labor costs are competitive compared with those of other countries," Benyamin explained.

As of now, around 50 Japanese companies operate in the island, with total investment reaching about US$400 million.

Sumitomo, National/Panasonic Matsushita, Nippon Steel, Sanyo and Epson are among well-known Japanese brands operating in Batam.