Singapore is working towards closer economic cooperation with Indonesia through assistance in the development of new Special Economic Zones (SEZs) in Batam and Bintan.
Singapore’s experience in developing industrial estate will help improve the investment climate and competitiveness on the two islands which are closer to Singaporethan Jakarta.
Indonesian Vice-President Jusuf Kalla and Singapore Minister of Foreign Affairs George Yeo met in Batam last Friday (18 March) to discuss about the plan. “We have considerable experience in China, Vietnam, India and elsewhere and they would like to learn from some of these experiences…Every year they need additional employment of three million jobs and to solve that unemployment problem, they need to develop manufacturing industries, and to develop these, you need conditions which are favourable to attract foreign investments. I believe we can help them there.” Mr Yeo told journalists.
The Singapore government would help Indonesia with SEZs policies and manpower but Mr Yeo stressed that the creation of SEZs must be undertaken by the private sector. “It has to be done by the private sector because in the end they are the producers of wealth. The government can set policies and we can help them with training,” Mr Yeo added.
The current industrial policies in Batam and Bintan have not been well received by investors. Earlier, Mr Jusuf Kalla had received complaints from businessmen on poor enforcement of law, tangled tax policies, frequent demonstrations, dualism between Batam city administration and Batam authority agency amongst other problems.
Executive Chairman of SembCorp Park Holdings (which runs the Batamindo industrial park), Ms Low is happy that the Indonesian government is fixing the problems. “They know exactly what they want to do and they known the urgency of doing it. They just need a little more time to fine-tune,” she said.
The Indonesian government is also planning to speed up development of at least eight other SEZs in various provinces. The areas identified are Banten, West Java,Central Java, East Java, East Kalimantan, North Sumatra, South Sulawesi and Aceh’s Sabang Island. “It will do so by carving out such zones from existing clusters of industries across the country. Investors will get incentives and be freed from red tape if they set up in these areas,” said Mr Jusuf Kalla who also stressed the importance for Indonesia to push through all the economic policy reforms.
Besides Batam and Bintan, Indonesia and Singapore would also work together to establish another SEZ near Jakarta. According to Minister Yeo, the details will be worked out soon. “I’ll be down in Jakarta in early April and we see how we can take the cooperation a step further,” he said.
S’pore to help Indonesia develop SEZs (Straits Times, 19 March 2006)
Singapore, Indonesia to explore special economic zones (Channel News Asia, 18 March 2006)
Singapore to help RI develop Batam, Bintan (Antara News, 19 March 2006)
Jakarta to roll out special economic zones within a year (Straits Times, 17 March 2006)