Batam is less attractive than Johor

JAKARTA. Employers remain unsatisfied with the government’s proposal to control the increase in land lease tariff in Batam, Riau Archipelago at the level of below 200%. The employers insist that the increase in land lease tariff will make Batam more less competitive compared to its closest competitor in this region, namely Johor, Malaysia.

Chairman of Batam branch of Real Estate Indonesia (REI) Djaja Roesli said that Batam is one of business locations with high costs in free trade zone in South East Asia. Let alone, the business regulations in the island are complicated.

The Government of Malaysia provides some incentives for the investors in Johor. Aside of the incentives, Johor also provides decent infrastructures. “Batam has less competitive infrastructures than Johor. Therefore, the investors have to cost more,” Djaja told KONTAN, Monday (28/11).

Chairman of Riau Archipelago branch of the Association of Indonesian Employers (Apindo) Cahya said that actually, Johor has a higher wages rate compared to Batam. However, investors are more comfortable to invest in Johor, thanks to the law certainty in the area.

The Riau Archipelago branch of Apindo recorded that a half of investors in Batam have moved their investments to Johor, Cahya said.

Head of Batam Industrial Development Authority (BP Batam) Hatanto Reksodiputro denied the assumption that the bureaucracy in Batam is complicated. Conversely, the investment procedure becomes more convenient, thanks to the one stop service (PTSP). To date, investors can access the licensing process through a special website.

Referring to inflation rate

To date, BP Batam has not yet announced final decision regarding the increase in land lease tariff in Batam. The new tariff schemes are now being reviewed by a technical team.

Meanwhile, the employers have agreed to reject the government proposal. The Batam branch of REI estimated, ideally, the increase in land lease tariff in Batam does not exceed 100%. The number includes the accumulated inflation during the absence of a tariff increase in the last ten years. The institution also hopes that the government will not generalize the tariff for all categories. For an example, the increase in tariff for the area of low-cost housing should be in line with the increase in its selling price, which is 30%,” Djaja said.

Meanwhile, Apindo suggested the government to increase the land lease tariff in Batam in a gradual manner, while improving bureaucracy system in Batam.

Chairman of Association of Industrial Zone (HKI) Sanny Iskandar stressed that the process of determining the tariff increase should be transparent. The tariff determination also should involve the entrepreneurs. “BP Batam should also consider the conditions in the neighboring countries, whether the increase in land lease tariff will be competitive or not,” he said.

(Muhammad Farid/Translator)