S'pore-Jakarta pact to create SEZs will inject fresh buzz into region

A NEW economic cooperation agreement Singapore and Indonesia signed yesterday could see a smoother flow of goods between Singapore and the Riau islands, and make it easier for businessmen to invest here.

The special economic zones to be created on Batam, Bintan and Karimun could have, among other things: Duty-free regimes for some imports, simplified procedures for work permits and visas and an investment service authority that would help businessmen deal with licences and documentation.

The well-planned infrastructure envisioned could well inject fresh buzz into Batam and Bintan, which are already well known as manufacturing bases.

The cut in red tape is also likely to benefit one-third of about 800 foreign companies in Batam and Bintan that are subsidiaries of Singapore-based companies.

The Singapore Government also hopes that companies in Batam will turn to Singapore for financial and logistics services, among others.

But while the Singapore and Indonesian governments are taking the lead to develop the special economic zones, Prime Minister Lee Hsien Loong yesterday made it clear that the Riau SEZs would not be like the Suzhou industrial park that Singapore helped build.

'In the case of Suzhou, Singapore companies put in significant investment to build up an industrial park from scratch,' he noted on a day trip to Batam for talks with Indonesian President Susilo Bambang Yudhoyono and to witness the signing of the agreement .

'But here in Batam and Bintan, there are already the prerequisites for SEZs, including infrastructure, skilled workers and strong brand recognition among investors,' he said.

What Singapore would do, Mr Lee said, will be to draw its experience from Suzhou and other SEZs it had been involved in to advise Jakarta on making the islands more investor-friendly, reach out to investors through the Economic Development Board's extensive network and help build up workers and administrators' skills.

Dr Yudhoyono too stressed that the success of the SEZs depended on the private sector's support, and at a tea session yesterday promised to make bold changes where necessary.

Both governments also demonstrated that they meant business in signing the long-awaited agreement.

They are setting up a joint steering committee and working group to put the plans for the SEZs into action.

The steering committee is chaired by Singapore Trade and Industry Minister Lim Hng Kiang and Indonesian Coordinating Minister for Economic Affairs Boediono, while the working group is chaired by Singapore's incoming Economic Development Board chairman Lim Siong Guan and Indonesian Trade Minister Mari Elka Pangestu.

Dr Yudhoyono left no doubt as to how serious he was about the scheme when he told reporters at a press conference about the deadline the two leaders had set for the steering committee.

'Four months from now, the joint steering committee will report to me and PM Lee on the progress that has been made, the problems that have been identified and solutions that they recommend,' he said.

'After which, on our part, we will do a total reconstruction and reformation to this province to ensure that we achieve our objectives. The bottom line is, we want to achieve one aim - to ensure that our services are cheaper, better and faster.'