Bintan deputy regent Mastur Taher said electronic company PT Escatec Lobam would cease operations permanently on Jan. 31 and dismiss its 437 workers.

The reasons for the departures weren't specified. The zone, which isn't fully implemented yet, is to cover Batam, Bintan and Karimun islands.

"Local authorities will look into why foreign investors are leaving ... (despite) incentives and facilities like tax holidays," he told The Jakarta Post on Wednesday.

Four companies owned by foreign investors stopped operations in 2007 and were relocated to other countries amid concerns the special economic zone, which is jointly managed with the Singaporean government, was having finding it hard to compete with other foreign investment regimes.

"We have heard about complaints on the high-cost economy, including red tape and complicated procedure in getting permit documents, but we want to stress here that the investors' exit has nothing to do with the government policy and regulations," he said.

He added the local manpower office which is involved in negotiating severance pay for dismissed workers would also participate in probing the reasons behind the departures.

Meanwhile, Jamin Hidayat, CEO of PT Bintan Inti Industrial Estate which manages the industrial zone on the island, said many foreign investors have left and relocated their factories to other countries because of the complicated procedure in obtaining investment permits, the high-cost economy and drastically decreasing orders.

"Escatec producing TV devices and spare-parts is to close down for numerous reasons including the complicated procedure in obtaining permits," he said.

According to him, many foreign investors have quit the islands mainly because of unpredictable government policies.

He said the remuneration system which was revised annually, and the overtime payment policies had triggered a financial problem for investors.

"For instance, Indonesia has adopted the 40-hour working hours per week while other Asian countries are still implementing the 48-hour one per week," he said, adding the government has yet to implement a friendly business policy it promised in the past.

Bintan has 26 foreign companies employing some 11,000 workers.

Timbul Sianturi, a member of the Bintan regental legislature, called on the local government and investors to sit together to discuss the reasons why the investment climate wasn't favorable to business.

"The local administration and investors should not blame one another and go to a round table to solve all problems which have affected the investment climate. Under the free trade zone, more and more investors are expected to come in to the island," he said.

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