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Jakarta Post

Labor issues blamed for investment slump in Batam

  • Fadli

    The Jakarta Post

Batam   /   Thu, March 6, 2014   /  09:50 am

Problems related to labor strikes and a drawn-out licensing process have been blamed for decreased investment and slower economic growth in Batam, Riau Islands, over the last three years.

The issue emerged during a business gathering held by the Batam Indonesia Free Zone Authority (BIPZA) in cooperation with the Singaporean consulate general in Batam on Wednesday.

Some 150 Singaporean companies operating in Batam were invited to the event.

Also joining the closed-door meeting were BIPZA head Mustofa Widjaja and Singaporean consul general in Batam, Gavin Chay, as well as leaders of Singaporean business entities operating in Batam.

BIPZA marketing director Purnomo Adiantono said that in 2013 Batam'€™s economic growth was 4.8 percent, far below the national figure of 5.7 percent. Previously, it had always been above the national figure.

'€œA number of challenges faced by investors, especially Singaporeans, were aired during the meeting. We have received some input and will find ways to solve the problems,'€ Purnomo said on Wednesday.

General manager of Batamindo Investment Cakrawala (BIC), Jhon Sulityawan, said that striking workers entering other factories and forcing laborers to join rallies was troubling to foreign investors.

'€œThis kind of activity must be stopped,'€ Jhon said.

BIC is the first and biggest industrial zone in Batam. It is a collaboration between Indonesia and Singapore officially opened by then president Soeharto and Singaporean Prime Minister Lee Kuan Yew in 1990.

Apart from worker strikes and rallies and a time-consuming business licensing process, which takes up to 90 days to complete, Purnomo said, there were also two other major challenges faced by investors in Batam: marine security and land status.

These issues, he went on, had hampered the realization of new investment in the region.

In 2011, the total number of new foreign companies was 91 with a total investment of US$103,081,403. Those numbers fell to 54 companies with $90,914,786 total investment in 2012 and to only 47 companies in 2013. Last year, however, total investment increased considerably to $155,206,217.

'€œThe [investment] value increased [in 2013] because there was a company investing a huge amount of money,'€ Purnomo said.

So far, he continued, Singaporeans were still the biggest investors in Batam, contributing a combined investment value of $4.2 billion from 979 companies. Businesses from China, Japan, India and Malaysia also made significant investments in the province.

'€œWe will convey the investors'€™ complaints to the concerning parties for follow up,'€ Purnomo said, adding that if no action was taken to deal with the investors'€™ complaints, it would create longer waiting period for investment realization.

'€œWe will feel the impact two to three years down the line unless we can handle this issue.'€

Purnomo expressed optimism that there would be ways to deal with the issues, arguing that his office had the commitment to maintain Batam as a prime destination for Singaporean investment.

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