Indonesia and Singapore will set up an investor centre and sort out issues such as tax rules, Customs and visas

AN INTEGRATED one-stop service centre for investors will be ready by September as part of efforts by Indonesia and Singapore to improve the investment climate in the special economic zones (SEZs) on the three Indonesian islands of Batam, Bintan and Karimun.

Both sides will also address immediately issues and problems faced by investors such as those concerning tax regulations, services, Customs procedures and visa processing, to make the SEZs more conducive to investments and business-friendly.

These were the key decisions made at the first meeting of the Joint Steering Committee, set up by the two countries following the signing of a new economic agreement in Batam last month. Under the Framework Agreement on Economic Cooperation, both countries will set up SEZs on the three islands to draw more investment and boost economic growth.

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.

At the one-day meeting yesterday, it was announced that a Joint Working Group, to be chaired jointly by Indonesia's Trade Minister Mari Pangestu and Singapore's chairman-designate of the Economic Development Board Lim Siong Guan, has been set up to carry out the tasks.

The planned service centre for investors will be run by Indonesia's National Investment Coordinating Agency and will be based on Batam.

Over the next year, the Joint Working Group will also prepare a road map on measures to be taken in areas such as investment, banking, taxation and immigration.

At a joint press conference, Indonesian Coordinating Economic Minister Budiono and Singapore's Trade and Industry Minister Lim Hng Kiang said the lessons learnt from the Batam, Bintan and Karimun SEZs will be replicated in other future SEZs across Indonesia.

When asked about competition from China, India and Vietnam, Mr Lim said: 'Batam, Bintan and Karimun islands are already a competitive venue as reflected in the past. We were able to attract a good stream of investment.

'At the peak, we generated 200,000 jobs and contributed significantly to domestic exports of Indonesia.

'But in recent years, because other countries have moved forward, we have not been able to capture the same proportion of investment as we had done in the past.'

Responding to Indonesian media comments that the three islands act as 'Singapore's hinterland' under the SEZ plan, Dr Budiono said: 'Our policy is to develop these islands and draw in investors. The situation today can be interpreted as one in which Batam, Bintan and Karimun are seen as being Singapore's hinterland because many goods go through Singapore.

'But in the longer term as we develop the economy in the three islands, we will be able to develop our own ports to export our goods.'

Accompanying Mr Lim were Education Minister and Second Finance Minister Tharman Shanmugaratnam, and Senior Minister of State for Home Affairs, Dr Ho Peng Kee.