Warning shots fired to stop protest in Batam

JAKARTA (JP): Police on Batam island fired warning shots on Monday to disperse a rowdy crowd protesting the government's decision to impose value added tax and luxury sales tax on the island earlier this month.

Antara reported some 200 protesters vandalized and stoned the Harmoni hotel and several nearby buildings, including a police station, and vehicles and shops in the downtown Batam area of Jodoh after they saw security guards beating a man in front of the hotel.

The man was mistakenly thought of as one of the protesters, the news agency said.

Some of the protesters took away Rp 2 million in cash from the hotel.

They also paraded across the town on dozens of motorcycles, cars and trucks.

Waldy, 36, an employee of the hotel who was reportedly suffering heart problems, was shocked by the incident and later died in the Harapan Bunda hospital.

The news agency quoted police sources as saying that the organizer of the rally, Ahmad Mipon, turned himself in to the police later in the day.

Ahmad, Antara said, had placed an advertisement in a local newspaper calling on the locals to join the street rally.

Many businesses and shops were closed on Monday and the city remained tense until late in the evening, the news agency said.

Local authorities have said that the new tax regulations have not only affected business people, but also local residents because they have caused the price of consumer goods to rise.

In an attempt to attract investors to Batam, the government turned the island, some 19 kilometers south of Singapore, into an industrial bonded zone in 1978. Later, several islands near Batam, including Karimun and Bintan, were included in the bonded zone.

According to the previous policy governing the area, businesses on Batam and the other islands in the zone were free from all import duties and "other government levies".

However, the government waived the tax incentives in 1998 at the prompting of the International Monetary Fund.

Under the new regulations, export-oriented companies will receive refunds for VAT and luxury good tax payments only after they show proof they export their products. (byg)