http://www.atimes.com/atimes/Southeast_Asia/GE10Ae02.html May 10, 2005
Indonesia's island of hope By George Leopold BATAM - Ismeth Abdullah fidgets in his chair as he talks about his life's work: an industrial development authority designed to attract foreign investment to this region of Southeast Asia where poverty and modernity coexist in eerie contrast. Abdullah, who works 18-hour days and flies daily between here and the Indonesian capital of Jakarta, embodies the aspirations of a region largely misunderstood by the West and struggling to bring jobs and hope to its more than 240 million inhabitants. If the Batam Industrial Trade Authority succeeds, more of the manufacturing jobs flowing to Asia could end up on this dusty island of stark contrasts. For now, Indonesia's unemployment hovers around 17%, Abdullah said, and average wages are $120 a month. The island has been investing heavily in training and education, such as Politeknik Batam, a program to train the engineers and technical managers of the future. The strategy is to offer Western companies an alternative to other industrial and free trade zones in the region, including Penang in Malaysia and Shenzhen in China. "Let Batam become a model that shows we can compete with other regions," said Abdullah, who also serves as acting governor of Indonesia's Riau Islands province, across the Strait of Malacca from Singapore. Frustrated by Jakarta's policies, he is campaigning to become the full-time provincial governor, running on a reform platform that includes tax exemptions for overseas investment and the extension of land titles from 30 years to 90. The trade authority, meanwhile, has sought to diversify by creating a regional office in Japan. "We don't want to depend too heavily on Singapore-based companies," Abdullah said. Batam has been largely untouched by recent catastrophic earthquakes in the region. But this former Dutch colony, once known for its rubber plantations, faces man-made obstacles as it woos investors. The trade authority is launching a marketing campaign to burnish Batam's image as an island immune to the instability seen elsewhere in Indonesia and firmly allied with investor-friendly Singapore, the self-styled Switzerland of Asia. Indonesia's Muslim majority, however, is an issue for some in the West. Local officials bristle at the idea that Indonesia is a monolithic Muslim culture. "We're not a Muslim country; we are a country with a Muslim majority," said one ethnic-Chinese executive here. But at the same time, the executive warned reporters not to identify US companies operating here, citing terrorism concerns. More convincing are the expats who've moved to Batam from other parts of Southeast Asia. They are betting the island will emerge as a viable alternative to Singapore and China as more companies move manufacturing offshore. One established manufacturing segment here is semiconductor packaging and testing. Advanced Interconnect Technologies has operated on Batam for decades and has expanded its operations while gearing up to handle 300-mm wafers. Companies like AIT receive regular wafer shipments that must be cut, packaged and tested. Cycle times are critical, and company managers claim the Batam plant's proximity to customers in Singapore gives it an advantage over powerhouses like Taiwan, which ships finished wafers to mainland China for processing. "It's China versus Southeast Asia" when it comes to fast back-end operations, said Michael McKerreghan, AIT's chief operating officer here. Despite Batam's sprawling industrial parks hosting familiar names like Infineon, Thomson and Philips, Abdullah expressed frustration with laws that limit investment and siphon revenues needed for infrastructure improvements, training, education and development. Indonesia is a member of the Organization of the Petroleum Exporting Countries (OPEC), for example, but has been importing oil for months as it copes with aging refineries and struggles under energy subsidies that have sapped the national economy. The oil-rich nation continues to generate electricity using diesel fuel, while burning off huge quantities of natural gas that would produce cheaper electricity with less pollution. Meanwhile, corruption is a persistent problem that has extended as far as the alleged murder by poisoning of a human rights activist aboard a flight of the state-owned airline. In recent weeks, pirates thought to be hiding along Indonesia's Sumatran coast attacked a Japanese tanker in the Malacca Strait. But there is hope that projects like the Batam industrial zone will be a catalyst for lifting the island's economy. Island officials stressed that electronics manufacturing will continue to be a key employer. Officials at the Batamindo Industrial Park said 41% of its tenants manufacture electronics for parent companies in Singapore. The plan now is to attract manufacturers from other parts of Asia. This article originally appeared in EE Times Posted with permission from KWR International Inc, a consulting firm specializing in the delivery of research, communications and advisory services. [Non-text portions of this message have been removed] ------------------------ Yahoo! Groups Sponsor --------------------~--> What would our lives be like without music, dance, and theater? Donate or volunteer in the arts today at Network for Good! http://us.click.yahoo.com/MCfFmA/SOnJAA/E2hLAA/BRUplB/TM --------------------------------------------------------------------~-> *************************************************************************** Berdikusi dg Santun & Elegan, dg Semangat Persahabatan. Menuju Indonesia yg Lebih Baik, in Commonality & Shared Destiny. www.ppi-india.org *************************************************************************** __________________________________________________________________________ Mohon Perhatian: 1. Harap tdk. memposting/reply yg menyinggung SARA (kecuali sbg otokritik) 2. Pesan yg akan direply harap dihapus, kecuali yg akan dikomentari. 3. Lihat arsip sebelumnya, www.ppi-india.da.ru; 4. Satu email perhari: [EMAIL PROTECTED] 5. No-email/web only: [EMAIL PROTECTED] 6. kembali menerima email: [EMAIL PROTECTED] Yahoo! Groups Links <*> To visit your group on the web, go to: http://groups.yahoo.com/group/ppiindia/ <*> To unsubscribe from this group, send an email to: [EMAIL PROTECTED] <*> Your use of Yahoo! Groups is subject to: http://docs.yahoo.com/info/terms/
