Riau Islands FTZs to cut red tape

Fadli, The Jakarta Post, Batam    

The Batam, Bintan and Karimun (BBK) Special Economic Zone Commission has ensured speedy licensing procedures free from illegal levies in a bid to attract foreign investors impacted by the global financial crisis, given lower local production costs compared to other countries in the region, such as Vietnam, Malaysia, Thailand and China. 

Head of the commission, Ismeth Abdullah, also the Riau Islands governor, told The Jakarta Post recently the commission was resolved to complete every investment license procedure in three weeks, compared to up to three months previously. However, environmental impact analysis reports would still take more than a month to complete. 

"We have cut the long and costly bureaucratic red tape and there won't be illegal levies demanded from officers in the field because we have provided them with proper incentives, besides monthly salaries," said Ismeth. 

Ismeth considered that the economic crisis in the United States and Singapore would have positive impacts for foreign investment growth in the Riau Islands, despite some forecasts by provincial foreign investors of a decline in business in 2009. 

He said the competitive position of the area would remain advantageous, given the far higher production costs in neighboring countries. 

"The crisis in America and Singapore has apparently affected the productivity of companies from these countries, so (our) bureaucrats should be able to conjure up strategic breakthroughs and be more proactive toward the business world given the current economic situation," said Ismeth. 

Total investments in the Riau Islands are currently valued at US$10 billion, with Singapore having the lion's share at $4 billion, followed by the U.S.at $1.5 billion. 

The BBK Zone Commission has projected further foreign investments of $5 billion over the next five years. 

According to Ismeth, the BBK zone performs more competitively than other industrial areas in Asia. Commission data shows that the production costs of a company in BBK were 15 percent lower than a similar company in Vietnam and 10 percent lower than in Johor Baru, Malaysia. 

"We must ensure that the flow of goods in Batam can run smoothly and free of illegal payments," said Ismeth. 

He was positive this initiative would get a positive response from business circles and assured business people that this would not merely be lip service but could be counted upon. 

Investors can file a complaint to the commission if licensing procedures exceed the fixed time limits and receive incentives, such as facilities in the next licensing procedures. 

Riau Islands Chamber of Commerce and Industry head Johannes Kennedy Aritonang said the commitment by the BBK zone commission to speed up investment license procedures should be applauded, but his office expected that this would not be just lip service. 

"Although (licensing procedures in) a number of countries are faster, this new breakthrough must be well appreciated. This shows that the government is committed to facilitating the business sector, a prerequisite for a special economic zone," said Johannes.