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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.
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