S'pore and Jakarta sign accord to revitalise Batam, Bintan, Karimun

SINGAPORE and Indonesia yesterday inked a new economic agreement designed to revitalise the islands of Batam, Bintan and Karimun, and which also promises to bring the two countries closer together.

Under the pact, the two nations will set up special economic zones (SEZ) to draw more investment and boost economic growth in the area.

Among other things, Singapore and Indonesia plan to promote the islands' manufacturing potential, ease the flow of goods, manpower and funds, and train workers and administrators.

The cooperation could boost business in both countries, as well as strengthen bilateral ties, Prime Minister Lee Hsien Loong and President Susilo Bambang Yudhoyono noted.

Both leaders witnessed the signing of the Framework Agreement on Economic Cooperation by their trade and economic ministers in Batam yesterday afternoon.

Calling it 'an important milestone for bilateral relations', Mr Lee noted that the proximity of the islands to Singapore made for mutual benefit.

'It will help to make Singapore more competitive, compared to China, India or Vietnam,' he said, after the signing at the Nongsa Point Marina Resort in a room full of officials and reporters.

Singapore intends to help set up the SEZs by advising administrators on how to make them more investor-friendly, promoting them, and helping in the technical training of workers.

Dr Yudhoyono said he hoped to draw investors to seize what he saw as opportunities in shipyard and oil-related businesses, and in the manufacturing industries.

He also thanked Singapore for the help it had given in the aftermath of the recent earthquake in Yogyakarta, saying: 'Singapore was among the first of our neighbours to rush to assist Indonesia with relief materials, including rescue teams and medical supplies for the victims.'

Before the signing, the leaders discussed bilateral relations and regional developments, as well as ongoing negotiations on an agreement on cooperation in counter-terrorism, extradition and defence.

Dr Yudhoyono noted that cooperation on maritime security in the Strait of Malacca with Singapore and Malaysia had resulted in a drop in piracy attacks.

Mr Lee was accompanied on the half-day trip by Senior Minister Goh Chok Tong, Foreign Affairs Minister George Yeo and Trade and Industry Minister Lim Hng Kiang.

After the pact's signing by Mr Lim and Indonesian Coordinating Minister for Economic Affairs Boediono, both Mr Lee and Dr Yudhoyono fielded media questions, then met over 100 businessmen from both countries at a tea session.

Dr Yudhoyono took pains to assure them that his administration would review rules and regulations, if necessary, to make it easier for them to do business.

If successful, the SEZs could refresh earlier efforts by Singapore and Jakarta to draw investment to the Riau province. While these had created more than 200,000 jobs from 1990 to 2000, investment had tapered off in recent years, Mr Lee noted.

'It's something to do with the investment environment, the rules, the legislation and the way these are implemented,' he said.

Singapore and Indonesia have targeted seven areas in which they hope to make changes to draw investors. They are in investment, finance and banking, taxation, customs and excise, immigration, manpower and in developing capability.

Both leaders also hope the new zones will act as a model for similar projects elsewhere in Indonesia.

Said Mr Lee: 'The world is watching to see how this will develop, what will happen. I believe the Indonesian government is very serious about doing this and Singapore will do its best.'