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Jakarta Post

Govt to disband Batam free trade zone authority

On a decline: Employees take a break at an industrial compound in Batam

Fadli (The Jakarta Post)
Batam
Wed, December 30, 2015

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Govt to disband Batam free trade zone authority On a decline: Employees take a break at an industrial compound in Batam. The government says it will disband the Batam Free Trade Zone Management Agency (BPK FTZ) in 2016 due to growing losses caused by an overlapping of authority between the agency and the Batam administration. (Kompas) (BPK FTZ) in 2016 due to growing losses caused by an overlapping of authority between the agency and the Batam administration. (Kompas)

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span class="inline inline-center">On a decline: Employees take a break at an industrial compound in Batam. The government says it will disband the Batam Free Trade Zone Management Agency (BPK FTZ) in 2016 due to growing losses caused by an overlapping of authority between the agency and the Batam administration. (Kompas)

Home Minister Tjahjo Kumolo has said the government will close down the Batam Free Trade Zone Management Agency (BPK FTZ) next year in an effort to eliminate the overlapping of authority in Batam.

The minister said the agency had lost around Rp 20 trillion (US$1.45 billion) in potential tax revenue in Batam over the last 10 years, which was a significant amount compared to the investments flowing into the industrial area.

'€œBased on observation, there is an overlapping of authority and conflicts of interest between the BPK FTZ Batam and the Batam administration so that this area cannot be developed. Missions to attract investors from Singapore also don'€™t work. Legally disbanding the BPK FTZ Batam will take time and we will therefore accelerate the process through a government regulation,'€ said Tjahjo.

He was speaking on the sidelines of the inauguration ceremony of acting Riau Islands governor Nuryanto, who is replacing Agung Mulyana who has retired, in Tanjungpinang on Wednesday.

Tjahjo said that based on the results of one year of evaluation conducted by the President Joko '€œJokowi'€ Widodo administration, the BPK FTZ Batam, which was previously called the Batam Authority, was not effective.

'€œBatam has long been provided with various facilities. This is the time to end this special treatment. During the last 10 years, the opportunity to raise Rp 20 trillion in tax revenue has been lost in Batam,'€ said Tjahjo.

The minister further said the government'€™s decision to disband the BPK FTZ Batam was made based on Cabinet meetings and would be finalized in a meeting of the offices of coordinating ministers in the near future.

'€œPresident Jokowi has agreed. It was the President who first called into question the benefits of having the BPK FTZ and it eventually led to the conclusion that one of best solutions was to disband it. Many investors have moved their businesses from Batam. In trade activities in Batam, the Singaporean government expected that the Riau Islands administration could become its partner. So I think Batam-related problems must be cleared,'€ said Tjahjo.

The minister could not give details on measures that would be taken to resolve the plan'€™s impacts on more than 2,000 BPK FTZ employees. However, he was optimistic that all employee-related problems could be completely resolved next year.

Separately, BPK FTZ Batam head Mustofa Widjaja said the agency, which had developed Batam since 1971, had become a strategic partner of the Batam administration.

'€œThe Batam administration and the BPK FTZ Batam need each other,'€ said Mustofa. He was unable to comment on Tjahjo'€™s statement over the government'€™s plan to disband the agency. (ebf)

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