MAY DAY RALLY

SINGAPORE will ink a pact with Indonesia to help it set up new economic zones in Batam and Bintan, after Saturday's elections, said Prime Minister Lee Hsien Loong yesterday.

The agreement will be signed by Mr Lee and Indonesian President Susilo Bambang Yudhoyono.

Announcing this, Mr Lee added: 'Then we'll be able to promote, bring in more investments into Indonesia and do good also for Singapore.'

The plan, aimed at helping Indonesia attract much-needed foreign investment, emerged in March during a meeting between Foreign Minister George Yeo and Indonesian Vice-President Jusuf Kalla.

Then, Mr Yeo had also said that while their creation would be private-sector driven, the Singapore Government would help Indonesia hammer out policies for the Special Economic Zones (SEZs) and to train manpower.

The SEZs will be developed in at least eight provinces, although Singapore's help will be focused on Batam and Bintan. At these economic zones, where there is a cluster of existing industries, investors will get incentives and be freed from red tape when they set up there.

Yesterday, Mr Lee explained why the SEZs were important for Indonesia.

The country's rigid labour laws were putting investors off.

And with its unions resisting the changes the Indonesian government was putting in place, multinationals are 'voting with their feet'.

'They are leaving, moving their plants to Vietnam, to China, more competitive places, or to Thailand,' he said.

Having SEZs would mean different rules, a more transparent environment, better administration and less corruption, he noted.

Singapore should continue to keep in tune with developments in the world, so that it could tap different countries and regional groupings like Asean as 'growth engines', Mr Lee said.

Free trade agreements and international diplomacy would be some of the ways in which Singapore could continue to expand, so that it would have sufficient avenues of growth.

The aim, said Mr Lee, was 'not just a two- or four-cylinder engine for Singapore but a six-cylinder engine ... to make Singapore a six-cylinder economy, one which will prosper with the world'.