Batam FTZ Considered Not Beneficial
Tuesday, 03 July, 2007 | 16:20 WIB

Tempo Interactive, Jakarta: The Change in Government Regulation (Perpu) No.1/2007, the basis of making Batam a free trade zone (FTZ), is regarded as causing the state to suffer a loss. The reason is, by this regulation, all goods that enter this zone will be free from duty, value-added-tax (VAT), luxurious goods sales tax and excise.

An economist of the University of Indonesia, Faisal Basri, said that the regulation caused the government to lose the potential of immense tax revenues from Batam. “Where is the service charge for the government? The decision is a losing one,” said Faisal when contacted by Tempo, Sunday (1/7).

According to him, the government’s paradigm in Batam case is mistaken. Urging the entrance of investment and increasing business competitive power, said Faisal, are not by instigating the policy of tax exemption. This is because, what investors are complaining about is not VAT exemption, but rather restitution payment acceleration. “Increasing competitive power should be by increasing product quality,” he said.

An economist of the Institute for Development of Economics and Finance, Iman Sugema, is suspicious about the background of issuing Batam’s Perpu that seems to be hurried. According to him, this shows that the Coordinating Minister for the Economy is unable to coordinate the policies which must be issued soon. “Why is Batam’s Perpu urged before the Indonesian Special Economic Zone (KEKI) Decree? Despite the decree’s scope it is larger than Batam (Perpu),” Iman told Tempo.

Trade Minister Mari Elka Pangestu emphasized that the KEKI Decree has not been discussed completely. “Don’t mix FTZ with KEKI,” she said.

Industry Minister Fahmi Idris said many incentives for Batam are still to be discussed in a decree. The Perpu No.1/2007 was only a legal standing for the change of Decree No. 36/2000 on Free Trade Zone and Free Ports.

In the meantime, Coordinating Minister for the Economy Bordiono refused to comment when asked about Perpu No.1/2007, which transforms Batam into FTZ.

_________________________ Indonesian Business and Investment News Aggregator