Singapore And Indonesia Endorse Plans For SEZs

by Mary Swire, Tax-News.com, Hong Kong

07 November 2006

Ministers from Singapore and Indonesia have endorsed plans for training programmes to develop the capabilities of administrators and the industrial workforce in the Special Economic Zones (SEZs) of Batam, Bintan and Karimun (BBK).

Ministers at the 3rd Joint Steering Committee (JSC) Meeting on economic cooperation in BBK last week agreed to a 2-phase training programme for SEZ administrators.

The plans place much emphasis on targeted vocational training, which will supply the SEZs with a stream of readily employable workers. The vocational training package that Singapore has tailored for BBK comprises consultancy services, ‘train-the-trainer’ programmes, and guidance from Singapore to develop a vocational training arm at the Batam Polytechnic.

The JSC also discussed other issues that would steer the development of the BBK SEZs in the right direction. These included keeping minimum wage increases low, improving the relationship between unions and employers, putting in place business-friendly taxation, customs and immigration measures, and developing legislation that would establish a clear authority to implement reforms in the BBK SEZs.

The creation of special economic zones, agreed by the two governments in June 2006, is designed to attract greater levels of foreign investment with tax breaks and other incentives, as Indonesia seeks to compete more effectively for foreign investment in the face of greater competition from other emerging markets like China, India and Vietnam.

The SEZs will lay the groundwork for both islands to become investor-friendly and cost-competitive manufacturing zones that can attract international flows of foreign direct investments.

To successfully develop Batam and Bintan as SEZs, the Framework Agreement spells out seven key areas where both countries will cooperate to ensure that business, regulatory and labour conditions in Batam and Bintam are favourable to investors. These are: investment, finance and banking, taxation, customs & excise, immigration, manpower and capability development.

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