30 Percent of Industries in Batam Threaten to Pull Out of Indonesia

KATADATA - The chaotic management of Batam has hampered investment climate on the island. Some 30 percent of investors in Batam have threatened to pull out of the free trade zone and free port area.

Acting Governor of Riau Islands Nuryanto said that companies in the automotive, electronics, and other sectors were planning to move to other countries, such as Malaysia and Vietnam.

"The reason is that Batam is no longer competitive because other countries offer better management. That’s why we’re going to address this," he said after a coordination meeting on Batam at the Coordinating Ministry for Economic Affairs, Jakarta, Friday (19/2).

Meanwhile, the struggle for authority between the Batam Management Board and Batam municipal government has made it difficult for investors to invest in the area. This issue will be immediately addressed by the government. (Read: Jokowi: Industry Must Be Freed from Over Regulations)

President Joko Widodo has had more than five closed meetings with his cabinet to discuss the question of dual authority in Batam. "This has raised doubts that have stalled investment in the BBK zone," said Widodo.

The President asked the Coordinating Minister for Economic Affairs to come up with options to resolve this problem, which were discussed during the coordination meeting. The decision made was to disband the Batam Management Board and hand over responsibility for the free trade zone and free port area to Batam municipal government.

For the transition period of between two months and one year, the government will set up a National Council of Batam,which will be headquartered in Jakarta and work in partnership with a Provincial Council in Batam. "Eventually we will transfer responsibility to the Provincial Council before we hand it over to Batam municipality," Nuryanto explained. (Read: Minister Nasution to Focus on Two Business Sectors to Boost Industry)