Megawati inaugurates new industrial estates in Batam
Megawati inaugurates new industrial estates in Batam
Fadli, The Jakarta Post, Batam
President Megawati Soekarnoputri inaugurated on Wednesday six new
industrial estates built at a total cost of US$210 million, and
an expansion of an electronics plant worth Rp 10 billion ($1.2
million), on Batam island.
The estates -- Panbil Industrial Estate, Tunas Industrial
Estate, Bintang Industrial Estate II, Citra Nusa Industrial
Estate, Citra Buana Industrial Estate and Latrade -- are expected
to attract more foreign investors and increase employment
opportunities on the island.
Batam currently hosts 611 foreign firms from 34 countries.
In her speech, Megawati commented on the fact that Batam
tended to be more of a free trade zone (FTZ) than a bonded zone,
as was originally intended in 1978.
She was aware that imported luxury goods entering Batam were
not subject to value added tax, and this fact indicated that the
government was being "tolerant" to Batam due to its unique
position as an industrial area.
"The government should provide a conducive environment for
industry so that it can develop," she said.
Batam Industrial Development Authority (BIDA) chairman Ismeth
Abdullah reiterated the importance of a law declaring Batam
island, which is located 20 kilometers from Singapore, to be a
free trade zone.
"Such a law will provide legal certainty for the investors
here. In return, it will attract more investors, meaning more
employment," he said.
FTZ status for Batam would mean that exporters operating on
the island would be allowed to import raw materials without
paying customs duties and taxes, pending their eventual
processing, transshipment or reexport.
Batam was declared an industrial bonded zone in 1978 to lure
investment and foster export competitiveness. Since then, the
island has become the country's main industrial center, where 70
percent of economic growth is contributed by the export-oriented
manufacturing sector.
The export value of the islands' output last year was over
$6.5 billion, or about 14 percent of the country's total exports
for that year.
According to Ismeth, some 60 percent of the 611 foreign firms
operating on Batam are involved in the electronics
sector. So far, the total value of foreign investment on Batam
amounts to $9 billion.