T

he Batam Free Trade Zone Management Agency (BPK FTZ) claims that the accusation made by a number of Western countries that companies in Batam acted as transshipment points, relabeling Chinese products as being manufactured in Indonesia for export to Europe, is premature and baseless, an official said on Wednesday.

Despite European accusations, the companies expanded their businesses from the middle of the year, thus indicating they were not fictitious and obviously carried out production activities, Batam Management Board (BP Batam) spokesman and One-roof Integrated Service director Dwi Djoko Wiwoho told The Jakarta Post.

He said that in the first semester of the year, nine companies had expanded their investment by more than US$186 million.

One of the nine companies has been blamed by a number of European countries for only re-labeling Chinese products.

“The accusation is premature, especially charges that many of the companies in Batam only send empty containers to Singapore and then fill them with Chinese products by taking advantage of Indonesian certificates of origin,” Djoko said, referring to the earlier claims of Sweden, Germany and Spain.

“The companies’ expansion has dismissed the accusations as untrue, since the companies are carrying out production activities in Batam,” he added.

Earlier, the three EU members claimed that many products exported from Batam were not produced in Batam, but were simply Chinese products repackaged to take advantage of lower tariffs.

The accusations were conveyed to BP Batam through the Trade Ministry, which received notification letters from the three European countries between April and early July. The letters outlined suspicions of the certificates of origin (SKA) issued by BP Batam for a number of products.

The first complaint was lodged in April by the three countries against the SKA issued by BP Batam at the end of 2011, while the second complaint was sent in early July this year regarding the SKA BP Batam issued in mid 2011.

The European reports were related to the importation of steel bolts produced by companies with the initials of PT I and PT F, which then exported the products to Sweden, Germany and Spain. The products were suspected to have originated from China and not produced in Batam.

A chemical company in Batam with the initials PT EO was also accused of the same transshipment practices — relabeling Chinese-made products as those produced in Indonesia.

Djoko, dismissed such claims, insisting that PT EO’s report of an expansion in investment worth Rp 700 billion was indicative that the company was operating well.

“We have responded to the accusation, and the claim is untrue. We have sent invitations to European countries to visit Batam and observe the production activities carried out by companies here,” said Djoko.

Every month, BP Batam issues 800 SKAs, 40 percent of which are for products bound for European destinations with the rest heading to Asian and Middle Eastern countries.

Despite refuting the claims, BP Batam is studying the authenticity of the reports from the European countries.