Make Batam more economically attractive: The Jakarta Post

Tourists posing for photos at the Balerang main bridge in Batu Aji, Batam.
Tourists posing for photos at the Balerang main bridge in Batu Aji, Batam. PHOTO: BERITA HARIAN FILE

In its editorial on Jan 11, The Jakarta Post calls for the creation of a special economic zone covering Batam as well as Bintan and Karimun to tap the potential of the three islands.

Protracted legal uncertainty caused by the dualism in administrative authority on Batam near Singapore could destroy the island's economic lustre, that has so far attracted thousands of foreign investors.

Batam's ace cards, such as cheap land, cheap labour and infrastructure that is fairly better than that in the rest of the country, could be rendered meaningless when compared to the shining attractiveness of competitive special economic zones in Vietnam, Malaysia and Thailand.

A series of controversies initially hung over the status of Batam when the Suharto government decided to develop the island, which was simply a fishing port in 1978, into an export-oriented industrial zone to take advantage of the spillover from Singapore's economic development. 

But a firm decision by the central government made it a free-trade zone with a single administrative authority in charge of public services, facilities and business licensing.

But when regional autonomy was introduced in 2001, the single authority called the Batam Development Authority was immediately challenged by the Batam regional (municipal) authority, causing uncertainty in business and investment licensing and spatial planning.

President Joko "Jokowi" Widodo should act quickly and firmly to remove the uncertainty as what has been encountered by the Batam Development Authority is hindering the development of the eight special economic zones (SEZs) designated in several provinces based on the 2009 SEZ Law.

Such an imbroglio may also stand in the way of government plans to develop 10 major tourist destination areas, each as a single development authority.

We think the best solution to the dualism of authority in Batam is the establishment of a special economic zone covering Batam and the two nearby islands of Bintan and Karimun. 

One of the economic reform packages launched in November specifically addresses the problems of administration and management in SEZs by authorising the administrator of an SEZ to act as a one-stop licensing center with the full autonomy to ask for the cooperation of virtually all ministries and government agencies, to recruit its own staff and to set its own standards of remuneration, different from other civil servants.

The SEZ development model, implemented successfully in many other countries, may include various types of development areas, such as free trade zones (FTZs), export processing zones and special industrial estates or single commodity-based clusters of manufacturing industries. 

A single administrator with superb inter-ministerial authority in charge of coordinating the provision of all tax incentives, facilities and expedited licensing is what is needed for SEZs.

This is also the kind of single authority needed for the development of the 10 new major tourist destinations the government plans to establish in Lake Toba, North Sumatra; Tanjung Kelayang on Belitung Island; Tanjung Lesung in Banten province; the Thousand Islands, north of Jakarta; Borobudur temple in Central Java; the Mount Bromo area in East Java; Mandalika on Lombok Island, Komodo Island in East Nusa Tenggara; Wakatobi in Southeast Sulawesi; and Morotai in Maluku.

* The Jakarta Post is a member of The Straits Times media partner Asia News Network, a grouping of 22 newspapers seeking to promote coverage of Asian affairs.