Thu, 24 Aug 2006

RI's first SEZ off to a good start, more of the same expected

Urip Hudiono, The Jakarta Post, Jakarta

The government's newly established special economic zone (SEZ) that embraces Batam, Bintan and Karimun islands appears to be off to a good start, with seven initial investment projects worth US$566.4 million ready to break ground in the area.

Of the projects, the largest by value -- $500 million -- will go to Karimun island, coming from South Korean Daeju Construction Engineering Co. Ltd. for the development of a shipyard and city housing complexes.

Singaporean Tiong Woon Co. Ltd., meanwhile, will invest $20 million in various projects, ranging from port management services, logistics, warehousing and shipping services to manufacturing.

Five remaining projects will be set up in the area's main island of Batam, with the development of a $15 million shipyard by Indonesia-Singapore firm PT Indo Multi Sarana and $2 million from PT Cemara Intan Shipyard being the largest investments.

The Singapore subsidiary of German-based Schmidtmann will establish a $2.6 million factory to manufacture prefabricated metal components for construction purposes. Other investments include PT Batamfast Indonesia's $2 million international shipping service, and PT Neptune Marine's $1.6 million machinery repair and business consulting services.

The memorandums of understanding for the investment projects were inked Wednesday between the respective local administration heads and representatives of the investors from Singapore, South Korea and India.

Coordinating Minister for the Economy Boediono, who with Riau Islands governor Ismeth Abdullah had witnessed the signing of the investment deals, said he hoped the seven projects would be "a turning point" for investment in the area, as well as for the whole country.

"We are expecting that there will no more news of investors packing up and relocating from Batam, but instead more of them coming to Batam, Bintan and Karimun," he said.

The projects, most of them planned to be up and running by next year, are expected to provide a total of 8,057 new jobs.

The Indonesian and Singapore government signed an agreement in July to develop the province's three main islands into a SEZ investment magnet. The concept is a pilot project of the government's fast-track program to boost investment in the country, which has been hampered by bureaucratic red tape and a lack of infrastructure.

It may set up similar SEZs in other well-prepared regions later on.

"Regions should understand that investment is the real key to improve the local economy and people's welfare," Boediono said, adding that the government hoped that local businesses would also invest in the SEZs.

Ismeth gave his assurance that the province's local administrations would do their best to accommodate investors, having already set up a one-stop investment service office in Batam. The office provides an integrated service for business permits, immigration services and tax payments.

"Investors are also waiting for the government to provide a legal basis for the SEZs in the form of a law, like other countries in the region have done, to ensure certainty of their businesses and investments," he said.

The SEZ concept, which mostly offers reduced or even duty-free facilities for imported raw materials and a relaxation in taxes, is currently based on a government regulation.