Jakarta, Oct 7 (Antara) - Batam, a tiny industrial island of the Riau Islands Province, is still struggling to resolve the problem of dual management.
The island is governed by the Batam Free Trade Zone Authority (BP Batam) as well as the Batam City government, and businesses have complained about this dual management.
Chief Economic Minister Darmin Nasution said on Friday that the government will find the best solution to this problem and conceded that businesses have complained about this peculiar situation in Batam.
"We have to find a solution to this problem. After all, this is a problem that has been lingering on for the past 10 to 15 years. Clearly, it will not be easy to resolve it," the Coordinating Minister for Economic Affairs stated at a meeting with the Regional Representative Council (DPD) and business representatives from Batam in Jakarta on Friday.
He explained that there are a couple of problems coming the way of effecting a change in the status of Batam from a Free Trade Zone (FTZ) to a Special Economic Zone (SEZ).
According to the minister, the government's Development Finance Comptroller (BPKP) is handling the problem of the dual management. The BPKP is carrying out an audit of the BP Batam institution before Batam's status changes to an SEZ effectively after the expiry of the transition period of three years.
"We do not want to just solve the problem on paper because it is a real issue of duality of charge between the residential areas and the industrial zone. We need to define clear procedures but we should also focus on the establishment of an SEZ first by providing incentives to investors who are currently in the residential areas to make them shift to the industrial zone," the minister elaborated.
A number of stakeholders from Batam attended the meeting. They included representatives of the Indonesian Chamber of Commerce and Industry (Kadin), the Indonesian Resettlement and Housing Development Association (APERSI) and the Indonesian Employers Association (APINDO).
Their main complaint was regarding the ineffective running of services on the part of the BP Batam and lack of clarity in land ownership. As a result of this, low-cost housing developers ended up obtaining land from a third party and paying high operational costs.
They also complained of complicated and long-winded bureaucratic procedures and tough requirements. As a result, businesses were reluctant to take off, although this region has the potential to compete with Singapore and Malaysia.
In the meeting, a proposal was also put forth to establish a special government in Batam backed by a legislation that ends the dual management system.
Indeed, investors in Batam should not be apprehensive regarding the government's plan as it is committed to transforming the islands of Batam, Bintan, and Karimun into the engines of the Indonesian economy. Batam, Bintan, and Karimun are a cluster of small islands in the Kepri province near Singapore.
On December 30, 2015, Home Affairs Minister Tjahjo Kumolo had noted that BP Batam would be disbanded in an attempt to improve services offered to the people and to boost investment in the islands.
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.
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.
The Batam Free Trade Zone Authority (BP Batam) on Batam Island, which is being developed as an industrial area near Singapore, is awaiting the dissolution 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 early this year (Jan. 5). ***3***
(A014/INE/B003)
EDITED BY INE
(T.A014/A/BESSR/Bustanuddin) 07-10-2016 21:30:5 |
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