Jakarta

PRESIDENT Susilo Bambang Yudhoyono and Prime Minister Lee Hsien Loong will sign an agreement on June 25 under which Singapore will help Indonesia set up new economic zones (SEZs) in Batam and Bintan.

The framework deal will be signed at a meeting in Batam, presidential spokesman Dino Pati Djalal said.

Mr Djalal said the two leaders will also discuss an extradition treaty as part of regional cooperation in combating terrorism and security.

The SEZ 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.

Mr Yeo had said then that while their creation would be driven by the private sector, the Singapore Government would help Indonesia hammer out policies for the 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.

When Mr Lee announced the agreement last month, he told reporters the pact would benefit both countries.

He said: 'Then we will be able to promote, bring in more investments into Indonesia and do good also for Singapore.'

Mr Lee noted that having SEZs in Indonesia would mean a more transparent environment for foreign investors, better administration and less corruption.

A joint steering committee will be formed to keep the pact on track. It will be anchored by heavyweights on both sides: Senior Minister Goh Chok Tong and Vice-President Jusuf.

The steering committee, which will also include the economic and foreign ministers from both sides, will meet soon after the pact is signed and may have to meet once every six months initially, Mr Yeo said in April.