Batam expects $540m with new licensing service

JAKARTA • At least US$400 million (S$543 million) worth of investment is expected to enter Batam in Riau Islands next year, following the launch of a three-hour licensing service on the industrial island last week.

The Batam Free Trade Zone Authority (BP Batam) is targeting those who are investing at least 50 billion rupiah (S$5 million) and/or employing at least 300 workers to enjoy the new service, called i23J.

The i23J is the first three-hour licensing service operated by the Investment Coordinating Board (BKPM) offered on any provincial level in South-east Asia's largest economy.

"The new system will expedite investment in Batam, which has been long sought by potential investors," BP Batam chairman Hatanto Reksodipoetro told The Jakarta Post during the launch of the new service on Thursday.

President Joko Widodo's administration envisions boosting investment in the country by issuing several economic stimulus packages stipulating, among other things, pledges to cut red tape and provide speedier licensing, especially for industrial estates, as the share of the manufacturing industry in gross domestic product has been going down in the past decade.

The requirements of i23J are much lighter than what was stipulated in the government's second economic policy package issued in September last year, which said businessmen who wanted to invest at least 100 billion rupiah and would employ at least 1,000 workers could enjoy the three-hour licensing service if they set up business in industrial parks.

Indonesian Ambassador to Singapore I Gede Ngurah Swajaya said investment from the city-state still topped the list of investors in industrial parks in Batam. "Singaporean businessmen favour the Batam-Bintan-Karimun special economic zone as their investment destination."

BKPM data showed that Singaporean investment amounted to US$3.6 million during the first six month of the year.

Industrial park operators lauded the launch of i23J, saying that it would likely expedite the licensing time for investment in Batam, now averaging six months. "The new service is a breakthrough for business here," said general affairs manager of the Batamindo Industrial Estate Tjaw Hioeng.

Indonesia's economic growth is expected to reach 5.1 per cent this year, according to latest government estimates, recovering from a six-year low economic growth rate of 4.79 per cent last year caused by poor commodity prices and contracting exports.

THE JAKARTA POST/ASIA NEWS NETWORK

A version of this article appeared in the print edition of The Straits Times on September 06, 2016, with the headline 'Batam expects $540m with new licensing service'. Print Edition | Subscribe