Government moving ahead with Riau FTZ plans

Urip Hudiono, The Jakarta Post, Jakarta

The government will set up a supervisory council and management agencies to oversee and manage free trade zones (FTZs) on Batam, Bintan and Karimun islands, as soon as the House of Representatives officially clears the legal basis for the concept.

Coordinating Minister for the Economy Boediono said Friday the government would wait for the House's final decision on the current emergency law on FTZs -- slated for Oct. 10 -- and immediately advance work on the delayed FTZ plan afterward.

"What we've all been actually waiting for is the legal basis (for the FTZs)," Boediono said.

"And after the legal matters comes the work at the operational level -- we have to establish the council and agencies, select the appropriate people to run them."

To avoid any management vacuum in the concerned areas, however, Boediono said the Batam Authority Agency would continue functioning as usual, managing the existing industrial zones in Batam.

Plans indicate the FTZ supervisory council is to be comprised of the governor, representatives from the provincial council (DPRD), the pertinent ministries and other members to be proposed by the governor and selected by the President.

The council will then set up and oversee the management agencies established for each of the three areas.

The government had to postpone forming the supervisory council and management agencies in September, following a debate among legislators over potential conflict between a government regulation in lieu of law (emergency law) on FTZs and existing regulations.

The government enacted the emergency law -- which provides for FTZ creation through government regulation rather than law -- to speed up the formation of the FTZs, the subject of an agreement with Singapore last year.

Emergency laws require approval from the House.

The government argued increasing competition from FTZs in neighboring countries constituted a "state emergency".

After having initially rejected the emergency law, the House is now a step away from passing it, with eight out of 10 factions agreeing with the government's arguments in a Thursday night hearing. The matter is slated for official resolution in a plenary session on Oct. 10.

Besides setting up the council and agencies, Trade Minister Mari Elka Pangestu said in the hearing the government would identify the FTZ sea and airports as well as specify the fiscal incentives, trade policies and immigration procedures after the law was passed.

Boediono said, in tandem with finding a legal basis for the FTZz, the government has continued to work out pending implementation measures with Singapore.

"There's already a one-stop service office (for all procedures), though we still need to check to see how it's actually working, and then work on the planned human resources training," he said.
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