FTZ Batam, Bintan and Karimun. Finally...

Free Trade Zone in Batam is officially effective on 1 April 2009. PP 63/2003 was lifted, meaning no VAT (PPN), no import tax (BM), and no more tax on luxury goods like cars and electronics (PpnBM) within the area of FTZ (Batam, Bintan and Karimun).

First few days of the FTZ have not affected the price of electronic goods in Batam. Not much of the imported consumption goods are seen on the shelves. According to the vice chairman of Kepri Chamber of Commerce, Abdoellah Gosse, prices of electronic goods will decrease to 30% within the next 3 to 4 months.

From my point of view, I think that FTZ will or might only works if:

1. the central government gives the local government the full authority for approving permits without having to go all the way to Jakarta to process it.

2. the local government have to strictly wipe off the corruption practice within the government. If all documentation still involves bribery from the lower level to the higher one, and government staff will only move their finger if cash are stuffed in their pocket, I don't think people would come and invest in this such unprofessional governed city.

3. Utility cost must be cut down from the current pricing. The cost now is too burdening the business in Batam which is more than 40% increment for electricity cost especially for Hotels and Malls, and even that, Batam is still not bright enough. If the cost is still this high while the world oil price and the Indonesian government already lower the price of oil, how can Batam competes with the neighbouring countries with better facility and offers. I believe, high cost delivers high quality. But I don't see this happen in this issue. Just after few days the FTZ was implemented, Batam is again sent to total darkness on April 3rd for almost 3 hours. I don't know what kind of excuses "again" this time.

4. Government must act as fair as their can to investors and labors. Not being like willow tree that moves when the wind blows. Saying nice words to investors when only funds are needed, and then siding to much to labors when votes are needed. The living cost if too high and the officials must find ways to lower the living cost. Lower the price of consumption goods, lower the oil price, provides more lower cost houses, NOT only by asking the businesses to pay more to cover the high living cost. Of course no business will survive with no workers. But also, no country would survive with no investors and business.

5. the efficiency of works of the government. Less talk, more works. Government must put more professional in the fields. Not by putting some senior high school graduates in the important department. Election is coming this April, but some legislative candidates don't even have the education nor the looks to govern. If you happen to come to Indonesia or Batam this month, you can "easily" see all the posters and billboards with faces of peoples you don't even sure they have what it takes for the job. It is like another version of America or Indonesia Idol audition.

Anyway, hopefully this policy will bring prosper to Indonesia, especially Batam. And the government will professionally maintain the good climate of business investment in the region. Once more, Batam will be the electronic haven in Indonesia like it used to be.


“If you hear there are still obstacles to doing business here, including illegal fees, please informed me directly. I will take stiff action against those who dare to disturb the business community here.” President Susilo Bambang Yudhoyono in his vist to Batam recently on Riau islands FTZ.


“We are upbeat that with all the legal hurdles cleared, foreign investment will significantly rise.” Ismeth Abdullah, Riau Islands governor.

“We will now see implementation in the field. Will the islands become more attractive as planned or not?” Johannes Kennedy Aritonang, Chairman of the Indonesian Chamber of Commerce and Industry for Riau Islands chapter.