Govt issues regulation on free trade zone council

Aditya Suharmoko ,  The Jakarta Post ,  Jakarta   |  Sat, 05/17/2008 11:15 AM  |  Headlines

After much delay and indecision, the President issued a regulation calling for the establishment of a national council to oversee free trade zones (FTZs).

Under the regulation, signed May 7, the coordinating minister for the economy will hold a position as chairman. Council members will include related Cabinet ministers, the National Police chief and the Investment Coordinating Board chairman.

Announcing the regulation on Friday, Coordinating Minister for the Economy Boediono said the council would report directly to the president on its activities, which he expected to begin soon.

However, Boediono will not lead the council because he left his ministerial post Friday to take up the post of central bank Governor next week. His replacement has yet to be announced.

Boediono said the regulation was accompanied by three presidential decrees appointing zone councils for three FTZs: Batam, Bintan and Karimun islands, all in Riau province.

Although the islands were designated FTZs in June 2007, they have yet to abolish tariffs on export and import duties.

The structure of the zone councils, which the government said would include significant private sector representation, was revised four times before the government settled on a structure that took many investors by surprise.

The governor of Riau was appointed chairman for all three zone councils, with the mayors of the three municipalities serving as vice chairmen for the councils.

Members of each zone council include the heads of the regional customs office, tax office and land agency, as well as the city police chief, district attorney, regional military commanders and the regional FTZ administration agency head.

Following the issuance of the regulation, Riau Governor Ismeth Abdullah said he was looking to draw US$5 billion in investment over the next five years.

Last year, Riau attracted about $1 billion in investment, more than double the $484 million it received in 2006.

The government issued the FTZ regulation in order to attract more foreign investors to the islands, thereby boosting economic development, creating more jobs and increasing non-oil and gas exports.

In the FTZs, the government will build free ports, a one-stop investment office and easier immigration procedures to attract businesspeople and investors.

Ismeth said most investors in the islands were involved in the electronics, pharmaceutical, shipbuilding and chemical industries.

Batam, at 1,507 square kilometers, is the smallest of the FTZs. Its main industries are electronics manufacturing and shipbuilding. Bintan, with its garment and electronics manufacturing industries, measures 4,063 square kilometers, and Karimun, renowned for its deep-sea port, covers an area of 8,000 square kilometers.

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