Thursday, February 02, 2012
The Batam municipal administration has judged that the Batam Free Trade Zone (FTZ) concept has not been implemented well due to underperforming ministers and lack of attention from the central government.
It also surmised that President Susilo Bambang Yudhoyono’s Cabinet members mainly comprised of politicians, so much so that it lacked expertise in policy making, such as the handling of investment issues in Batam, which was an economic success during former president Soeharto’s administration.
These thoughts were conveyed by Batam Mayor Ahmad Dahlan on Wednesday after a Batam, Bintan and Karimun (BBK) FTZ coordinating meeting at the Batam Novotel Hotel. His remarks were a response to questions regarding the current investment climate in Batam and the closure of a number of industries owned by foreign investors.
“This is my view of the FTZ. Maybe I’m not objective in assessing it, but I deem that the current Cabinet ministers are less familiar with the problems, thus they do not pay enough attention to the Batam FTZ concept,” he said.
“As an example, Riau Islands Governor Muhammad Sani and I recently met the agriculture minister regarding a number of restrictions on the import of basic necessities. We discussed Batam, but he was unaware that Batam had FTZ facilities. He even asked for a copy of the documents, so the governor had to give him the copy.”
According to Dahlan, Batam’s rapid growth as an industrial city is attributed to the role of the Batam Industrial Development Authority (BIDA), which is quite powerful. However, following the reform era, the institution no longer played a large role, and depended fully on many parties and ministerial policies.
“Especially now when many of the ministers are from political parties. They lack reference in policy-making,” said Dahlan, who was a former career official at BIDA.
Dahlan also perceived that the Cabinet ministers must pay attention to all the issues as a whole and not only Batam.
“As residents [of Batam], we must be active in reminding those in Jakarta. But, I view the current investment condition in Batam as still good. The climate is good, but the weather is sometimes stormy and rainy,” Dahlan said.
He added that the central government should streamline a number of FTZ regulations that some investors have said are not in line with their business goals. The government also must pay attention to infrastructure, including building a container port for the island, he said.
As of early this year, three foreign investors in Batam had officially reported to the Batam Manpower Office that they had laid off workers. Business closures have led to 5,000 workers losing their jobs and have further raised the unemployment rate in Batam.
Three foreign companies that have reported the termination of employment (PHK) of their workers after closing their factories are PT Exas Batam, PT Nutune and PT Panasonic. They will complete the PHK process this year.
According to a source at the Batam Manpower Office, PT Exas Batam will lay off 170 of its permanent employees. It employs 2,000 workers, a majority of them outsourced and therefore the firm does not need to report terminating their employment.
PT Nutune will dismiss 850 of its permanent workers. It employs 2,800 workers who are mainly contract workers, PT Panasonic will lay off around 1,000 workers. It has laid off 9,000 workers since 2009.
The chairman of the Indonesian Employers Association (Apindo) in Riau Islands, Cahaya, said his group deemed the wage issue and subsequent worker protests as frightening to investors in Batam.
“Apindo can no longer do anything in regard to the wage issue. If we are too hard it could lead to other problems,” Cahaya said.
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