Jakarta, Jan 8 (Antara) - The Batam Free Trade Zone Authority (BP Batam) on Batam Island, which is being developed as an industrial area near Singapore, is awaiting dissolution by the government for overlapping authority with the Batam Municipal Administration.
Dualism in the management of the free trade area between BP Batam and the Batam Municipal Administration has reportedly cast doubts among investors over running their businesses on the island.
Over the past decade, the government is estimated to have suffered annual losses amounting to Rp20 trillion due to overlapping authority between BP Batam and the Batam Municipal Administration.
According to President Joko Widodo (Jokowi), the dualism in the management of the free trade zone has triggered doubts among businesses to invest capital in the BBK area, a cluster of small islands of Batam, Bintan, and Karimun.
"The overlapping of authority between BP Batam and the city administration over land permits and other land functions has caused doubts among investors to do business in the BBK region. Both BP Batam and the city administration have the authority based on regulations," President Jokowi stated during a limited cabinet meeting on Tuesday (Jan. 5).
The meeting was a follow-up to a previous meeting held to discuss the management of the Batam Free Trade and Free Port Zone in the BBK region.
On December 30, 2015, Home Affairs Minister Tjahjo Kumolo noted that BP Batam would be disbanded in an attempt to improve services offered to the people and to boost investment in the islands.
"We set a target to dissolve BP Batam in January 2016. We have conducted a study along with the relevant ministries," the home affairs minister remarked while addressing the inauguration of Riau Islands Governor Nuryanto in the Provincial Capital of Tanjungpinang in late December, last year.
BP Batam was earlier named the Batam Industrial Development Authority established based on Presidential Decree No. 41/1973 on the Batam Industrial Area. BP Batam was formed based on Government Regulation in lieu of Law (Perppu) No. 1 of 2000 on the Free Trade and Free Port Zone.
Minister Tjahjo explained that the plan to dissolve BP Batam was based on considerations of emerging problems due to the overlapping authority between BP Batam and the Batam Municipal Administration that could hinder the flow of investment.
"Taking into account the problems that have emerged so far, we consider that BP Batam should be dissolved. The overlapping of authority poses constraints to development and investment," he pointed out.
According to the minister, the dualism in the management of the Batam free trade zone has reduced potential tax revenues for the state by about Rp20 trillion per annum.
"The overlapping authority has caused failures in achieving tax receipt targets. An annual potential of generating Rp20 trillion in tax revenues is lost," the minister claimed.
In the meantime, several foreign investors have sought information on the plan to disband BP Batam after the home affairs minister made the plan public.
"We have received many telephone calls inquiring about the matter. There is restlessness among investors after the minister's plan was made public," Purnomo Andiantono, the promotion and public relations director of BP Batam, noted.
He said that one of the biggest industrial area operators in the zone, which was established in the 1990s, had called him seeking information on the government's plan.
"They called us to get information as they have to explain it to the foreign investors operating in their industrial areas," said Purnomo.
BP Batam Head Mustofa Widjaja appealed to foreign investors in the Batam Free Trade and Free Port Zone to not panic regarding the home affairs minister's statement on the planned dissolution of BP Batam.
"We urge investors or prospective investors to remain calm. BP Batam has made assurance that there would be no problem. There is no need to panic," Mustofa affirmed.
The Indonesian Regional Representative Council (DPD) plans to seek an explanation from Chief Economic Minister Darmin Nasution about the government's plan to dissolve the Batam Free Trade Zone Authority.
"We plan to meet the minister to know the decision that will be taken on the Batam Free Trade Zone¿s management," stated Haripinto Tanuwidjaya, a member of Committee IV of the DPD on Thursday.
He said he was unaware about the government's plan to take a decision on the BPK FTZ. But he hoped that whatever was decided about the free trade zone in Batam, it would ensure certainty of doing business in Batam.
Haripinto also asked the government to focus on handling the overlapping authorities between the Batam City administration and the Batam Free Trade Zone Authority.
"It should not merely focus on whether it should be dissolved but on how to remove the authority from overlapping," he stated.
According to the DPD member, the overlapping authority over the Batam Free Trade Zone had led to a decline in investment in Batam, compared with investment in other areas in Indonesia.
He said as a result of the overlapping of authority, the issuance of business licenses had become protracted and disadvantaged investors.
"Investors want certainty, simple and fast issuance of business permits. It seems that importing automotive to the free trade zone for example needs a longer time than importing it to Jakarta. This is contradictory to the aim of Batam to make business easy," he said.***3*** (A014/INE)EDITED BY INE(T.A014/A/BESSR/A. Abdussalam) 08-01-2016 16:42:2 |
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