H

ome Minister Tjahjo Kumolo announced on Wednesday that the central government was planning to dissolve the Batam Free Trade Zone Authority (BPK FTZ) next year to end the duplication of authority in Riau Islands province'€™s most developed region.

Tjahjo said data showed that for the last 10 years the government had lost Rp 20 trillion (US$1.4 billion) in potential tax revenue from Batam, while the investment value entering the municipality was incomparable.

'€œBased on our observations, there has been a duplication of authority and conflicts of authority between the Batam BPK FTZ and Batam municipal administration, making this region unable to develop. The mission [of the institution] to lure investors from Singapore also has not run as expected,'€ Tjahjo said in the provincial capital of Tanjung Pinang on the sidelines of the inauguration of acting Riau Islands governor Nuryanto.

Tjahjo said the dissolution of the Batam BPK FTZ had been approved in a recent Cabinet meeting.

The move, he said, would be sped up with the issuance of a government regulation, as issuing a law would take longer.

Tjahjo also said that the existence of the Batam BPK FTZ, which was previously named the Batam Authority, was no longer effective according to an evaluation conducted by President Joko '€œJokowi'€ Widodo'€™s administration last year.

'€œBatam has long been receiving special facilities. It'€™s now time to end it,'€ he said.

He said Jokowi had been very supportive of the policy as the President had for a long time shared the concern about the performance of the Batam BPK FTZ.

'€œThat'€™s the point. Many investors have run away [from Batam]. The Singaporean government, meanwhile, is expecting to partner with Riau Islands,'€ he said.

With regard to the employees of the Batam BPK FTZ, who amount to over 2,000 people, Tjahjo expressed optimism that the problem would be handled next year.

Batam BPK FTZ head Mustofa Widjaja, meanwhile, declined to comment on Tjahjo'€™s statement regarding the planned dissolution of his institution.

Mustofa underlined that the Batam BPK FTZ, which was established in 1971, was a strategic partner for the municipal administration.

'€œBoth mutually need each other,'€ he said.

Batam refers to both an island and municipality in the Riau Islands. The Batam metropolitan area consists of three main islands '€” Batam, Rempang and Galang '€” all connected by the 642-meter Barelang Bridge.

Home to more than 1 million people, Batam is also the third largest city in Sumatra after Medan in North Sumatra and Palembang in South Sumatra.

Riau Islands'€™ Batam, Bintan and Karimun islands, meanwhile, are home to hundreds of premium resorts and shopping establishments, largely because of marine tourism and accessibility from Singapore.

Data from the Central Statistics Agency (BPS) showed that Batam, Bintan, Karimun and Tanjung Pinang were the dominant destinations in the province with 1.1 million, 230,000, 71,000 and 66,000 foreign tourists visiting each area, respectively, during September this year.