Minister visits Batam, discusses FTZ status

Minister visits Batam, discusses FTZ status

Fadli and Zakki P. Hakim, The Jakarta Post/Batam/Jakarta

The Ministry of Trade is still assessing solutions to resolve the
ongoing debate on the status of the industrial island of Batam,
despite the government's previous statement that it was going
ahead with the "enclave" free trade zone (FTZ) option.

Trade minister Mari E. Pangestu left for Batam on Thursday for
a two-day visit to meet with local authorities and private sector
representatives, and also to take a look around the industrial
island.

"We are seeking suggestions from locals on what is best
concerning Batam's status," she said.

Mari met on Thursday night with some 50 local businesspeople,
who are members of the Indonesian Employer's Association
(Apindo), the Indonesian Chamber of Commerce and Industry (Kadin)
and the Industrial Zone Association.

The closed-door meeting, which went on for about three hours
and finished around midnight, was followed by a meeting with
local authorities in the morning.

"But we have yet to go into the matter of enclave or whole
island FTZs. This is purely fact finding," Mari said.

Riau Islands province's Kadin chairman Johanes Kennedy
Aritonang said the minister had promised that the government
would come to a decision as soon as possible.

"The uncertainty has contributed to declining investment in
the island," he told The Jakarta Post.

According to John, local businesspeople actually prefer the
adoption of a whole island FTZ concept.

In January, the government declared that it was going to
maintain the previous government's proposal for an "enclave" FTZ
on Batam, despite opposition from elements in the House of
Representatives.

The government decided that it would limit free trade areas to
specific places on the island, despite the House's desire to make
the whole island a free trade zone.

The debate between the government and the House started during
former President Megawati Soekarnoputri's term, in which both
sides failed to reach an agreement on the status of Batam as a
FTZ.

But after Vice President Jusuf Kalla took control of the
Golkar Party last December, there has been no further opposition
from the House. Golkar controls 128 of the House's 550 seats.

Last September, the House endorsed a bill granting FTZ status
to the whole of the island of Batam. The bill was opposed by the
government.

Without the government's approval, the law cannot take effect,
creating further uncertainty for investors on the island, which,
since 1978 has been promoted as an industrial bonded zone to
attract foreign investors.

Batam has become one of the most attractive manufacturing and
industrial locations in Southeast Asia, hosting some 600 foreign
companies and absorbing over US$3 billion in foreign investment.