U.S.-Singapore trade pact good news for Indonesia
U.S.-Singapore trade pact good news for Indonesia
Adianto P. Simamora, The Jakarta Post, Jakarta
The newly signed free trade pact between the United States and
Singapore will also benefit Indonesia as it will increase
investment on the industrial islands of Batam and Bintan,
chairman of the Batam Industrial Development Authority (BIDA)
Ismeth Abdullah says.
Ismeth anticipated more Singaporean manufacturing companies
would relocate their operations to the two islands, which offer
lower production costs.
"This (the trade pact) is good news for Indonesia because we
can benefit," he told The Jakarta Post over the weekend.
He said that following the U.S.-Singapore free trade
agreement, companies from other countries like South Korea, Japan
and Taiwan had also expressed interest in investing in Batam and
Bintan, which are only a short ferry ride from Singapore.
He added that with the growing manufacturing activities,
exports from the two islands would also increase.
Singapore Prime Minister Goh Chok Tong and U.S. President
George W. Bush last week signed a bilateral free trade agreement
in Washington, kicking off sweeping trade liberalization in goods
and services.
Full implementation of the deal is expected in 2004, once the
U.S. Congress has approved it.
Under the deal, Singapore will be allowed to export high-
technology products assembled on Bintan and Batam to the U.S.
duty free.
The agreement to include high technology products from Bintan
and Batam was reached last year on Bintan during a meeting
between U.S. trade representative Robert Zoellick, Singapore
trade minister George Yeo and Indonesian industry and trade
minister Rini MS Soewandi.
At the meeting, Zoellick said some 100 items of information
technology products from Bintan may enter the U.S. market via
Singapore.
Ismeth said that Singaporean companies would be keen to open
manufacturing operations on Batam and Bintan as the cost of
manufacturing goods on the two islands was only about half the
cost of that in Singapore.
The flow of investment into Batam and Bintan has shown a
rising trend. Last year, Batam and Bintan attracted over US$600
million worth of investments with 80 new foreign companies coming
in.
As of March 2003, there were 22 new foreign investment
companies on Batam, injecting some $60 million worth of
investment.
The export value of the islands' output last year was over
$6.5 billion, or about 14 percent of the country's total exports
in a year.
According to Ismeth, some 60 percent of the total 611 foreign
investment companies operating on Batam were in the electronics
sector.
While on Bintan, about half of the total 38 companies produce
electronic goods.
Indonesia is now studying the possibility of entering into a
free trade agreement with the U.S., which is the country's
largest export market accounting for 16 percent of total export
sales.
The U.S. has hopes that its trade pact with Singapore will
become a model for future deals with other countries in the
Southeast Asian region.
Adianto P. Simamora, The Jakarta Post, Jakarta
The newly signed free trade pact between the United States and
Singapore will also benefit Indonesia as it will increase
investment on the industrial islands of Batam and Bintan,
chairman of the Batam Industrial Development Authority (BIDA)
Ismeth Abdullah says.
Ismeth anticipated more Singaporean manufacturing companies
would relocate their operations to the two islands, which offer
lower production costs.
"This (the trade pact) is good news for Indonesia because we
can benefit," he told The Jakarta Post over the weekend.
He said that following the U.S.-Singapore free trade
agreement, companies from other countries like South Korea, Japan
and Taiwan had also expressed interest in investing in Batam and
Bintan, which are only a short ferry ride from Singapore.
He added that with the growing manufacturing activities,
exports from the two islands would also increase.
Singapore Prime Minister Goh Chok Tong and U.S. President
George W. Bush last week signed a bilateral free trade agreement
in Washington, kicking off sweeping trade liberalization in goods
and services.
Full implementation of the deal is expected in 2004, once the
U.S. Congress has approved it.
Under the deal, Singapore will be allowed to export high-
technology products assembled on Bintan and Batam to the U.S.
duty free.
The agreement to include high technology products from Bintan
and Batam was reached last year on Bintan during a meeting
between U.S. trade representative Robert Zoellick, Singapore
trade minister George Yeo and Indonesian industry and trade
minister Rini MS Soewandi.
At the meeting, Zoellick said some 100 items of information
technology products from Bintan may enter the U.S. market via
Singapore.
Ismeth said that Singaporean companies would be keen to open
manufacturing operations on Batam and Bintan as the cost of
manufacturing goods on the two islands was only about half the
cost of that in Singapore.
The flow of investment into Batam and Bintan has shown a
rising trend. Last year, Batam and Bintan attracted over US$600
million worth of investments with 80 new foreign companies coming
in.
As of March 2003, there were 22 new foreign investment
companies on Batam, injecting some $60 million worth of
investment.
The export value of the islands' output last year was over
$6.5 billion, or about 14 percent of the country's total exports
in a year.
According to Ismeth, some 60 percent of the total 611 foreign
investment companies operating on Batam were in the electronics
sector.
While on Bintan, about half of the total 38 companies produce
electronic goods.
Indonesia is now studying the possibility of entering into a
free trade agreement with the U.S., which is the country's
largest export market accounting for 16 percent of total export
sales.
The U.S. has hopes that its trade pact with Singapore will
become a model for future deals with other countries in the
Southeast Asian region.