JAKARTA (TheInsiderStories) – Indonesian government eyeing to reap new investment Rp14 trillion (US$979.02 million) in Batam by the end of 2019 from last year’ only Rp1 trillion, the head told TheInsiderStories. Several investors has informed to relocated their factories from China to Batam, he adds.
Head of Batam Indonesia Free Zone Authority (BIFZA) Edy Putra Irawady noted, the escalating trade war has made many companies want to relocate their firms to the island at Riau province, which has geographical advantages as a trade connectivity hub for the Pacific and Atlantic routes, as well as North and South.
“There are many Chinese and United States companies want to move to Batam. Why? Apart from its geographical location Batam has an Inland Free Trade Arrangement policy,” said Irawady.
As known, Pegatron Technology originating from Taiwan has become one of the companies that relocated its factories from China to Batam. From the iPhone component supplier company from Taiwan, Batam has pocketed an investment of around $40 million.
He acknowledge, Asia Satellite Internet Exchange Limited (ASIX) in Hong Kong, decided to sell its assets and aimed to relocate the satellites to Batam. They will move about 14 transmitters to the island. However, he did not mention how much investment value that Batam received from the satellite provider.
Since the beginning of the year, Batam had received various new investments such as from Japanese company Maruho Hatsuyo Batam, South Korean’ Sammyung Precision Batam, Hong Kong’ Simatelex Manufactory Batam, China’ GP Enterprise, South Korea’ DK LOK Corporation to Japan’ Rubycon.
Irawady revealed, Batam continues to strive to catch up with infrastructure in order to attract more new investment, especially investment relocation opportunities from China in the midst of a trade war.
While, the swift relocation of investment from China to neighboring countries such as Vietnam and Malaysia, according to him, because these countries are better prepared. They have more prepared human resources. Their infrastructure has also been built a long time ago, while we are just starting here, he said.
Therefore, Irawady focused on developing Batam into a more competitive industrial estate by building more adequate logistics infrastructure that underpins industry 4.0.
Regarding logistics, Irawady revealed that he plans to improve around three major ports in Batam so as to reduce expensive logistics costs and port capacity that is not yet optimal. To repair the port, the cost needed is around Rp4.5 trillion.
“I have promised to the Vice President (Jusuf Kalla) in September the logistics tariff must have dropped from now $400 per teus, to under $250 per teus. We are also trying to increase the capacity of the port so that it can reach 2 million per teus later, “he said.
In terms of regulation, Irawadi admitted there were still many problems faced in Batam. Among other things, the rules that apply there without the knowledge of the government, especially the Ministry of Finance. During this time, he added, many rules clash with each other.
“For example, the ease of doing business in terms of trade and land acquisition that must be passed by entrepreneurs. As a result, a number of investments went bad. Many were stalled, around 2,800 hectares,” he said.
The intended trading system is that employers are required to include a Surveyor Report regarding commodities produced and raw materials. In fact, in existing regulations, this process doesn’t have to be passed. Among them, Government Regulation Number 10 of 2012 concerning Customs, Taxation, and Excise Treatment as well as Procedures for the Import and Export of Goods to and from and located in Areas That Have Been Defined as Free Trade Zones and Free Ports.
According to Irawady, going forward, if there are ministries that want to require the trading system, they must first report to the Ministry of Finance. The goal is so that entrepreneurs can get direction in accordance with applicable regulations. In addition, it does not cause confusion for investors who want to expand.
Written by Lexy Nantu, Email: firstname.lastname@example.org