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IN A move that will further cement their close relationship, Singapore and Indonesia will work together to develop new Special Economic Zones in Indonesia.

The plan, aimed at helping Indonesia attract much-needed foreign investment, emerged during a one-hour meeting between Minister for Foreign Affairs George Yeo and Indonesian Vice-President Jusuf Kalla here yesterday.

'We talked about how Singapore can help them,' Mr Yeo told journalists after the meeting.

'We have considerable experience in China, Vietnam, India and elsewhere and they would like to learn from some of these experiences.'

Indonesia will create instant special economic zones, or SEZs, out of existing clusters of industries. Mr Jusuf will oversee their development in at least eight provinces over the next year.

Mr Yeo said their creation will be driven by the private sector in both countries, but that the Singapore Government would help Indonesia hammer out policies for the SEZs and to train manpower.

Both sides will begin working out the details soon, he said.

'I'll be down in Jakarta again in early April and we see how we can take the cooperation a step further,' he said.

Singapore will likely focus on ways to further develop the existing SEZs in Batam and Bintan, where many Singapore investors are already operating, Mr Yeo said.

Both countries would also work together to establish another SEZ near Jakarta, he added.

Tanggerang and Bekasi, both about an hour's drive from the Indonesian capital, are possible sites because they already are home to thriving manufacturing industries with existing infrastructure.

Other targets for the SEZs include Banten province, Central Java, East Java, East Kalimantan, North Sumatra and South Sulawesi.

Some critics have pointed out that problems in the existing SEZs of Batam and Bintan have hampered their ability to attract investments from the region.

Investors here have complained about the high cost of doing business on these islands, tangled tax policies and corrupt officials as well as disruptive labour disputes.

Such problems have sent many foreign investors packing to countries with better business climates, such as Vietnam and China, local business people said.

But Mr Jusuf, accompanied by five economic ministers and several top officials and business leaders, talked with local and foreign investors in various industrial estates in Batam and Bintan yesterday.

One of them was Ms Low Sin Leng, executive chairman of Singapore company SembCorp Park Holdings, which runs the Batamindo industrial park.

While hailing the SEZs, she said the execution and implementation of policies have not been effective.

But after attending the talks with Mr Jusuf yesterday, she said she is happy that the Indonesian government is working hard to fix the problems.

'They know exactly what they want to do and they know the urgency of doing it,' she said. 'They just need a little more time to fine-tune.'