Tariffs of land lease in Batam skyrocketing

October 25, 2016, 01.41 PM  | Reporter: Handoyo
Tariffs of land lease in Batam skyrocketing


JAKARTA. The increase in the tariff for land lease has led to unease in businessmen and public in Batam. Batam Industrial Development Authority (BP Batam) on 18 October released the Head of BP Batam Regulation No 19/2016 on the new tariff on land lease or the annual authority preemie charge (UWTO) for terms of 20 years and 30 years.

For an example, starting from 19 October the extension tariff of land lease in Batam Center for a term of 30 years increased by 372% from only IDR70,500 per meter square to IDR333,000 per meter square.

Meanwhile, the tariffs of land lease for apartment and industry in the area also increased by 467% to IDR290,900 per meter square and 679% to IDR251,250 per meter square, respectively.

However, the tariffs are actually lower than the standard tariffs set by government under Ministry of Finance Regulation No 148/2016 on Public Service Agency Service Rates of Batam Free Trade Zone and Free Port Authority. This regulation sets IDR23,400 per meter square - IDR6.59 million per meter square of standard tariffs for land lease for commercial purpose during 30 years of term. The regulation also sets IDR17,600 per meter square – IDR3.41 million per meter square of tariffs for land lease for residential purposes.

Even though the BP Batam’s regulation sets the lower tariffs, businessmen in Batam see the new tariff is a burdensome. Let alone, the regulation also affects to not only the new land lease, but also to the extension of a new land lease.

“The policy should not be retroactive”, said Chairman of Riau Archipelago office of Indonesian Employers Association of Riau Archipelago Office Cahya. According to Cahya, the new regulation is impractical, on the grounds that BP Batam should re-map the land status in Batam.

Meanwhile, Chairman of Batam branch of Indonesian Chamber of Commerce and Industry Jadi Rajagukguk added that the policy on land lease in Batam is ambiguous due to the vague of regulation on BP Batam status.

However, Director of Public Relations and Promotion of BP Batam Purnomo Andiantono said the tariffs of land lease in Batam remained unchanged during the last 30 years. Therefore the tariffs need to be adjusted. Purnomo expected that the businessmen do not overreact to the new policy. ”The government will not burden the businessmen”, he said.
Purnomo added that the tariff adjustment is essential to prevent speculators, who stunt investors come to Batam. The status of land lease cannot be removed, on the grounds that the lands in Batam have a state-ownership status.

However, the tariff rise becomes contra productive to the government’s objective to boost national economy through investment.

(Muhammad Farid/Translator)

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