Wednesday, November 15, 2006

Govt to set up 3 more special economic zones

Business and Investment - November 06, 2006
The Jakarta Post, Jakarta

Following the success of the newly established special economic zone (SEZ) covering Batam, Bintan and Karimun islands in Riau Island province, the government will develop similar SEZs in another three regions, a senior official has said.

The three regions are in North Sumatra, South Sulawesi and Bojonegara in Banten.

Investment Coordinating Board (BKPM) head Muhammad Luthfi said Friday that at least 14 regions, including Bali, Makassar, East Java, and North Sulawesi's Bitung island, had been proposed as SEZ, but only Batam, Bintan and Karimun met the minimum standards.

Bojonegara, located on the western tip of Java, is the location with most potential for investment as the government plans to build an international port worth Rp 7 trillion (US$768 million), he said.

With regards to North Sulawesi, he said the province already had the biggest port in Sulawesi and was the center of prime export commodities, including fish, shrimp, cocoa and nutmeg.

Luthfi said that North Sumatra had the same potential as its neighboring Penang, an economic zone in Malaysia, that has begun to lose its allure.

Luthfi refused to specify which parts of North Sumatra and South Sulawesi would be turned in SEZs, saying the official announcement of the new SEZs would be made after Nov. 6, when the Coordinating Minister for the Economy will hold a meeting to discuss the draft law to support the operation of SEZs in the country.

Indonesia launched its first SEZ in June after signing a framework agreement on economic cooperation with Singapore to transform Batam, Bintan and Karimun into SEZs in a bid to draw investment from the neighboring country, which is running out of space for its industries.

The two countries have set up a joint steering committee for policy-making and oversight, whose members include ministries and high-ranked officials from both countries.

On Saturday, the two governments discussed the minimum wage rate that would be imposed in the zone. According to Singaporean officials, the wages should be regulated so that investing in the three islands will be more competitive with popular investment destinations such as China and Vietnam.

Speaking to reporters after the meeting, Coordinating Minister for the Economy Boediono said setting the minimum wage would be one of the main issues to be discussed with Singapore, the main sponsor of the special economic zone.

The minimum rate in Batam is about Rp 800,000 (about US$85) per month at present.

Also present at the meeting were Manpower and Transmigration Minister Erman Suparno and Singaporean Trade and Industry Minister Lim Hng Khiang, who led the Singaporean delegation.

The SEZ is a government-designated area in which companies enjoy various duty-free imports of raw materials and relaxed taxation.

Batam, Bintan and Karimun islands also provide a one-stop investment program offering an integrated service for business permits, immigration issues and tax payments. Investors can have their business permits in less than 14 working days, compared to the current 30 to 60 days, and bypass all licensing laws laid down by the local administrations. (09)



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