Batam Mayor HM Rudi (right) surveys a road widening project in Jodoh, Batam, Riau Islands. The Batam city administration has pushed various infrastructure projects to boost the economy, which has seen a slowdown in the past few years. Among the impacts is the loss of over 200,000 jobs and the closing down of many companies.
TANJUNG PINANG, KOMPAS – The new executive board of the Batam Industrial Development Authority (BP Batam) has been given two years to turn Batam in the Riau Islands into a Special Economic Zone (KEK).
The replacement of the agency’s executive board is one of the central government’s efforts to revive the island’s economy, which has sharply declined in the past several years. In addition, the change is also expected to restore industrial activities, as well as create employment opportunities for residents.
The new board was formally approved by the government and the Council of Batam\'s Port and Free Trade Area on Monday night. It replaced BP Batam’s previous seven-member executive board.
"Now, the board comprises of a chairman and five deputies. There is no vice chairman like in the previous one," Riau Islands Governor Nurdin Basirun said in Tanjung Pinang, Riau Islands, on Tuesday.
The previous board was led by Hatanto Reksodiputro as chairman, assisted by Agus Tjahajana as vice chairman and five deputies, including Sigit Pramudito, Gusmardi Bustami, RC Eko Budi Santoso, Robert Sianipar and Juninho Jahja.
The new board consists of Lukito Dinarsyah Tuwo as chairman, with five deputies, including Major Gen. Eko Budi Supriyanto, Insp. Gen. Bambang Purwanto, Purwiyanto, Yusmar Anggadinata and Dwi Eko Winaryo.
"The new leadership will focus on realizing a special economic region [KEK] on the island, reviving the economy and reducing conflicts among the authorities," Nurdin said.
The Batam free trade zone’s economy has been deteriorating in the last three years, with economic growth reaching an average of 7 percent in the past several years. Currently, Batam\'s economic growth is less than 2 percent. At least 300,000 workers were laid off due to the economic downturn.
Chairman of the Indonesian Employers Association (Apindo) in Riau Islands, Cahya, said that Batam faced difficulties recovering from its economic downturn due to many legal problems.
Under the leadership of Hatanto, BP Batam often ignored the aspiration of businessmen and residents as indicated by the sharp increase in various fees for public services on the island.
"In a sluggish business condition, levies were increased by hundreds of percent. How can we run businesses in such a situation," he said.
Recently, BP Batam even required the use of land titles as collateral for bank loans. It also requested investors to give a guarantee worth 10 percent of their investment value if they wanted to secure land.
The guarantee cannot be refunded if construction of the business is not on target.
Dualism
Another obstacle is the overlapping authorities between BP Batam and the Batam municipality administration affected at least 80 percent of the island’s territory.
Its status as a Special Economic Zone in early 2016 was expected to end this dualism. With the new status, BP Batam will only take care of certain areas devoted to industrial sites, while the Batam municipality administration is in charge of remaining territories.
Batam Mayor HM Rudi said the KEK status should have been implemented in September 2016. "It is impossible that one area comprises only factories. Of course, there should be hospitals, schools, markets and various facilities that are not industry related," he said.
He added that the municipal government of Batam was ready to give all the authority and KEK licensing process to institutions that manage the area, and the Batam municipality will concentrate on taking care of various issues outside the KEK.
