APEC SUMMIT: HANOI 2006

They are attracting investors, says PM Lee, who has highlighted the zones to Bush and Abe HANOI.

PROGRESS has been made in the Riau Islands Special Economic Zones (SEZs) and a "significant number" of investments are streaming in, Prime Minister Lee Hsien Loong said yesterday.

He told Singapore reporters this after a meeting here with Indonesian President Susilo Bambang Yudhoyono yesterday on the sidelines of the Asia-Pacific Economic Cooperation (Apec) summit.

At the bilateral meeting, the two leaders were briefed on the developments in Batam, Bintan and Karimun by Indonesian Coordinating Minister for the Economy Budiono and Singapore Trade and Industry Minister Lim Hng Kiang - the co-chairmen of the zones' joint steering committee.

Dr Budiono told reporters later that 37 new projects with a total value of US$73 million (S$114 million) were approved between June and October. "It is a modest amount, but it's still a turnaround. In the past, you heard about the exodus, but now people are coming back," he said.

In June, Singapore and Indonesia inked a new economic agreement to revitalise the Riau islands of Batam, Bintan and Karimun.

Singapore and Indonesia plan to promote the islands' manufacturing potential. Singapore intends to help by advising administrators on how to make them more investor-friendly, promoting them, and helping in the technical training of workers.

For example, Singapore's Institute of Technical Education will be roped in to help the Batam polytechnic produce enough graduates with the right skills needed by industries in the SEZs.

The pilot zone also promises rules that make it easier to do business, including pro-investment Customs and tax regimes.

Modelled on these first SEZs, three more SEZs are being planned by Indonesia to attract fresh investments to the country. These could be set up in Bojonegara in Banten, in North Sumatra and in South Sulawesi, once the blueprint is approved.

Yesterday, PM Lee also said that both sides are working out some "basic decisions" such as the Riau Islands SEZs' legal framework and minimum wage. But he told Dr Yudhoyono of the competition that the Riau Islands are facing in this region.

In particular, Mr Lee said that Vietnam has been "very successful" in drawing investments.

"The VSIP, the Vietnam-Singapore Investment Park, in Ho Chi Minh City has got many tenants coming in and in fact is expanding and the expansion is already 50 per cent taken up," he said.

He remained confident about the SEZs, saying: "If the Vietnamese can do it, so can the Indonesians."

He also told Dr Yudhoyono that he had spoken to both US President George W. Bush and Japanese Prime Minister Shinzo Abe about the SEZs.

Mr Lee had met Mr Bush during the American leader's Thursday visit to Singapore and he met Mr Abe here on Friday night.

Mr Lee said he encouraged them "to get their investors to take an interest in Indonesia because there are opportunities there and because it is in their interests that Indonesia does well".