BATAM REMAINS ATTRACTIVE TO FOREIGN INVESTORS

By Andi Abdussalam

Jakarta, July 4 (ANTARA) - Situated close to Singapore, Batam Island, which is poised to become Indonesia's main industrial hub in the Brunei Darussalam-Indonesia-Malaysia-Philippines East ASEAN Growth Area (BIMP-EAGA), is expected to remain attractive for investment.          Riau Islands Governor Muhammad Sani - who is also the chairman of the Free Trade and Free Port Areas (KPBPB) of Batam, Bintan and Karimun Islands ¿ expressed optimism that the island would continue to attract foreign investors.          The governor was responding to the recent rioting and other unrest, which were feared to discourage foreign investors from running their businesses in Batam and the surrounding isles of Bintan and Karimun.          About a week ago, legislator Airlangga Hartarto, who is the chairman of the House of Representatives (DPR) Commission VI on trade and industry, also expressed discontent over the slow development of Batam in comparison with that of Malaysia's Iskandar Development Region.          "They have been very aggressive in attracting investment over the past several years, but Batam seems to be making no progress," he said, urging the Batam Development Board (BP Batam) to be more aggressive in promoting the island to investors.          Airlangga stated that Batam would be able to attract more investors if it was serious in developing its infrastructure, adding that the central government would also increase the budget for Batam in 2013.          "This year, BP Batam only set an investment target of US$300 million, which is relatively small if compared with the Rp640 billion allocated by the central government," Airlangga said.           Besides, Batam has been plagued by unrest in recent days, such as the intergroup clashes last month and late last year.          Last month, outside Planet Holiday Batam, there were violent clashes among certain groups of people, which created much unrest and left one dead. Police arrested and named at least 10 suspects. After the arrest, there were rumours that the conflicting groups would trigger more unrest by distributing provocative leaflets and circulars.          "We have named 10 suspects: four from the attacking group and six from their rival," Barelang City Police Headquarters Chief Senior Commissioner Karyoto said.          In November 2011, Indonesian National Police arrested 27 people in connection with the violent demonstrations ¿ over wages ¿ that rocked the industrial zone of Batam, Riau Islands, for two days.          In the wake of the demonstrations, Batam authorities agreed to a more substantial increase in the city's minimum wage from the following year onwards. After lengthy negotiations, all sides agreed to peg the minimum wage to the Reasonable Living Cost Index (KHL).          As a result, the minimum wage was set at Rp 1.32 million (US$147) a month, which fell short of what the workers had been demanding.          Initially, there was a disagreement about the monthly minimum wage. Apindo (the Indonesian Employers Association) wanted it set at Rp 1.26 million, while the workers demanded Rp 1.72 million. This discord, it is believed, led to the rioting.          However, Governor Muhammad Sani, in his capacity as the chairman of the Free Trade and Free Port Areas (KPBPB) of Batam, said the situation had improved and the industrial island was still attractive to investors.          "The condition is now conducive. No foreign firms have left Batam because of the intergroup conflicts," he said here on Tuesday.          The governor explained that the rioting did not alone make foreign firms take the drastic step of leaving the island, adding that a business would close only if there was "an accumulation of unresolvable problems".          He asserted that Batam remained promising and offered several advantages to foreign investors.          Applications for foreign investment in Batam in 2012, particularly in the KPBPB areas, reached a value of US$61.4 million.         "In May, there were nine foreign investment firms which were interested in making investments worth a total of US$61.4 million in this island," said Dwi Djoko Wiwoho, the spokesman of Batam for business affairs.          He said the nine investors - from Germany, Singapore, India and Ireland - were interested in making investments in the offshore oil industry as well as in the metal, electronics and service industries.          Moreover, Batam has also attracted a Slovakian company. The company will invest in a steam power plant (PLTU) of a capacity of 2×50 megawatts, worth US$185 million, in the Kabil area of Batam.          "The project will be developed in cooperation with PT Pembangunan of Batam City," said Djoko, who is also the Director of Single Door Integrated Service and Public Relations of Batam Company, in Batam recently. He made the statement in the presence of the President Director of Istroenergo Group (IEG), Jozef Barat, and the Deputy Director of the Slovakian Exim Bank, Rudolf Silahovec.          Djoko told the press that the planned investment was a follow-up of a working agreement between  PKB and the Slovakian company.          The agreement was signed in Bratislava, Slovakia, on June 12, in the presence of Indonesian Coordinating Minister of the Economy Hatta Rajasa and the Finance Minister of the Slovakian Government.          Last weekend, a 10-member delegation from the ASEAN Connectivity Coordinating Committee (ACCC) also arrived in Batam to oversee the implementation of the Batam Single Window (BSW) system operated by the Batam Industrial Development Authority.          The 10 delegates are also part of the Committee of Permanent Representatives to ASEAN.          "They want to personally oversee the implementation of the Batam Single Window system and visit the Batamindo industrial zone," Djoko said.***2***   (T.A014/A/KR-BSR/F001) 04-07-2012 14:38: