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.