RI urged to decide on Batam status

RI urged to decide on Batam status

Zakki P. Hakim, The Jakarta Post, Singapore

The incoming government should quickly decide on the free trade
zone (FTZ) status of the industrial island of Batam, otherwise
existing and potential investors would turn away to competing
investment areas in China and Vietnam, Singapore foreign minister
George Yeo has warned.

Yeo was quoted by the visiting chairman of the Indonesian
Chamber of Commerce and Industry (Kadin), MS Hidayat, as saying
that Batam had the potential to become a leading industrial
center like China's Shenzhen within 10 years as long as the
lingering legal uncertainty was quickly resolved.

Hidayat said that whether to turn the whole of Batam into a
FTZ area (as suggested by the House of Representatives), or to
adopt the enclave FTZ approach where only certain industrial
zones on the island would enjoy FTZ status (as demanded by the
current government), was not an issue for investors as what was
most important was that the status of Batam be clearly defined.

A delegation of Kadin officials held a meeting with Yeo on
Monday during a visit to Singapore to attend the five-day Global
Entrepolis @ Singapore (GES) 2004 investment and trade forum.

Singapore companies are among of the top investors in Batam,
located some 30 kilometers southeast of the city state.

Yeo's statement came after the House and the outgoing
administration failed to reach an agreement on the status of
Batam as a FTZ. Last month, the House endorsed its own version
of a bill that granted FTZ status to the whole of Batam Island.
This 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 by the government as an industrial
bonded zone to attract foreign investors. It is now one of the
most attractive manufacturing and industrial locations in the
Southeast Asia region, playing host to some 600 foreign companies
and absorbing over US$3 billion in foreign investment.

The government has argued that extending full FTZ status to
the whole Batam would cause envy in other regions not privileged
with FTZ status.

"The Kadin local representative (in Batam) told me that there
are about 250 investors that have expressed interest in investing
in Batam, but postponed their decisions until there is a clear
decision on Batam's future," Hidayat told reporters on the
sidelines of the GES annual forum.

He added that Kadin had invited the investors, who are mostly
participants in the GES forum, for a two-day visit to Batam.

This year, the GES is expected to attract more than 3,000
leading executives, entrepreneurs and venture capitalists from
Asia and the world, with more contingents from India and China as
well as from the U.S., Japan, Russia and Korea, and regional
groups from ASEAN, the Middle East and European Union.

In total, some 10,000 visitors from around the world are
expected to attend the event, in which cosmetics producer PT
Martina Berto and apparel maker PT Great River Garments represent
the Indonesian side.