Poor infrastructure affects N. Sulawesi economic zone

Poor infrastructure affects N. Sulawesi economic zone

By Christiani S.A. Tumelap

MANADO, North Sulawesi (JP): The delayed construction of new
transportation facilities in North Sulawesi has impeded the
development of the Manado-Bitung Integrated Economic Zone, the
head of the zone management team said.

S.H. Sarundajang said without adequate infrastructure, no
large investors would establish businesses in the area.

"The simple licensing and tax incentives offered to investors
are terrific. But they still need good infrastructure such as
wider roads and better airport and harbor facilities to ensure
their businesses run fast and well," he told visiting members of
House of Representatives Commission V for trade, industry,
investment, cooperatives and small and medium-size entrepreneurs.

The government initially planned to construct new arteries
connecting Manado to Bitung and other areas to facilitate the
transportation of containers. It also planned to expand the
runway and terminal facilities at Sam Ratulangi Airport in Manado
to enable it to serve wider-body aircraft like the Boeing 747,
and build a 15,000 square-meter cargo consolidation center at
Bitung Harbor.

Sarundajang, who is also the mayor of Bitung, said the zone's
management could not construct the required infrastructure on its
own because its capabilities and tasks were limited to promoting
the zone and facilitating investment in the area.

The development of the zone relies on the government, he said,
adding that to support the zone's initial activities the
government injected about Rp 4 billion (US$571,428) in 1999.

The 2,500 square-kilometer Manado-Bitung Integrated Economic
Zone, which covers Manado, Bitung and 19 districts in Minahasa,
was inaugurated in September 1998 as part of the government's
efforts to promote economic activity in eastern Indonesia.

There are 13 other economic zones in Indonesia's eastern
provinces, including Biak in Irian Jaya, Sanggau in West
Kalimantan, Ende in East Nusa Tenggara, Seram in Maluku and Pare
Pare in South Sulawesi.

In an attempt to attract foreign direct investment in the
areas, the zones' managements are authorized to provide
incentives, including a simplified licensing process, free import
duty for the import of raw materials for export-oriented
production and basic machinery and equipment and tax facilities,
including up to 10 years loss carry-forward, the reduction of
income tax on dividends, free luxury sales tax for the import of
capital goods as well as accelerated depreciation and
amortization for income tax purposes.

Sarundajang said business potentials in the Manado-Bitung
economic zone included agribusiness, industry, fisheries, mining
and tourism.

He said agriculture and agroindustry offered ample
opportunities, with the production of 276,924 tons of coconuts
per year, 8,478 tons of clove per year, 300 tons of vanilla per
year and 264,000 tons of fish per year.

The economic zone, however, has attracted no new investors
since it began operating eight months ago despite an aggressive
overseas promotional campaign, he said.

Mindo Sianipar, a commission member from the Indonesian
Democratic Party of Struggle (PDI Perjuangan), said the
management of the economic zone was ill prepared to fulfill its
tasks.

"The zone's management does not even has its own office," he
said.

A commission member from the Golkar Party, Djelantik
Mokodompit, said religious conflicts in nearby Maluku deterred
foreign investors from entering the zone.

Hundreds of refugees from North Maluku are currently being
sheltered in Bitung.

Djelantik said the failure to attract investors was also due
to confusion over whether the zone's management or the local
government would have authority over the zone when Regional
Autonomy Law No. 22/1999 is put in place in 2000 or 2001.

The law, along with Intergovernmental Fiscal Balance Law No.
25/1999, will give provincial administrations greater autonomy in
managing their affairs and a greater share of the revenue
generated in their territory.

Sarundajang said the local government's authority could
overstep the jurisdiction given to the management of the economic
zone by the central government.

"I think the provincial administration should just let us run
the economic zone as was planned by the government to avoid
conflicts of interest," he said.