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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.
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