Batam Bintan Bridge to Connect the Two Island - Photo by BIFZA

Jakarta (TheInsiderStories) — In a limited meeting in the President office, Joko Widodo decided the Batam Indonesia Free Zone Authority (BIFZA) will manage by the regional government to remove the dualism in Batam Island, Riau. For years, the agency under State government control.

“President and Vice President decided to remove the dualism. So it must be only one and not two, to make the dualism disappear,” said Coordinating Minister for Economic Affairs, Darmin Nasution, after the meeting on Wednesday (12/12).

He added, the BIFZA dissolution is expected to be implemented next year. As for now, the government is processing some records, such as assets, legal documents, data, and others.

The agency liquidation is also in accordance with a government plan to change Batam from a free trade zone (FTZ) to special economic zone (SEZ). Nasution highlighted that the SEZ in Batam will still be ongoing, based on regional policy.

The dualism by BIFZA establishment is considered to hindering development in Batam. Moreover, President Widodo mentioned, development acceleration in Batam has been discussed since 2015 and the time to scrap the dualism.

“We want Batam and its surroundings to have a strategic position that can be maximally developed, to appeal and be competitive as a special economic zone and be attractive for investors,” said the president.

Last March, Indonesian Foreign Minister Retno Marsudi and Singapore’s Foreign Minister Vivian Balakrishnan the operation of Nongsa Digital Park in Batam.

The development of the digital park was an implementation of the deal between President Joko Widodo and Singapore PM Lee Hsien Loong in 2017 to support the collaboration between private sector players from both countries to develop the digital economy sector in Batam. The Nongsa Digital Park is the initial phase of the development of digital parks across the country.

Singapore and Batam have a long relationship, given the presence of a significant number of Singapore companies operating in Batam. Nongsa Digital Park was initiated by businessman Mike Wiluan, a son of Chris Wiluan, the founder of Citramas Group.

Meanwhile, the Head of BIFZA Lukita Dinarsyah Tuwo said the Nongsa Digital Park will be gradually transformed into a SEZ. He declined to set the timetable as the declaration of the area to become an SEZ.

The Citramas Group was reported to be investing around US$700 million the develop the digital park, which will comprise of an international data center, an incubator for start-ups and apartments for techno-preneurs and programmers.

Wiluan has said his Infinite Studios, a Singapore-based integrated media entertainment and creative services company, will produce movies and animated TV series at its Nongsa facility.

Recently, Taiwanese Pegatron Corp., announced to move one of it’s unit factories to Indonesia. Its subsidiary, Chinese’ iPhone and smart-phones assembler plans to open a factory in Batam, Riau Province, starting next year.

The company will only move its non-iPhone products assembling division to the Indonesian factory. Pegatron’ investment in the factory is expected to start this month, with it looking to start operations in mid 2019. Pegatron plans to rent a factory and employ around 10,000 workers.

First established by a presidential decree in the 1970s, Batam was once at the forefront of the island’s industrialization. But over the decades, Batam’s economic activity has stalled.

The government has taken several steps to increase investment in Batam, including appointing a new head, replacing entire management teams, as well as changing the island’s decade-old status as a FTZ to that of a SEZ.

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