batam report 14 - KWR International

III-2003
REPORT
Batam Industrial Development Authority. BIDA Building, Batam Centre, Batam Island 29400, Indonesia. Tel : (62 - 778) 462047 Fax : (62 - 778) 464092. Website : www.batam.go.id. E-mail : inquiry@batam.go.id
Indonesia New Labour Law No. 13/2003
Special points of interests:
! Free Trade Agreement
between USA & Singapore
(How Batam can benefit
from it)
! Indonesian Environment
Week 2003
! Building Confidence of the
Japanese investors to
Batam
! President Megawati
Inaugurates New Industrial
Estates In Batam
! An International Intelligence
School
Inside this issue :
! New Cooperation In
Agricultural Industry In
Batam
! Dignitaries Visit
! Business Investment
Forum
! SCI Investment Mission
! A Solution For The Future
! Awal Bros Hospital
! Panbil Mall
! What A Way to Relax
On March 25, 2003, the President of the Republic
of Indonesia signed a new labor law. Since then,
the new law effectively replaced the previous
Decree of the Minister of Manpower (known as
KepMen, Keputusan Menteri) No. 150/2000 and
other labor regulations.
(two) types of labour placement organizer: First, a
contractor where terms and conditions of
employment are at least the same as the user;
Second, terms and conditions of employment is
the responsibility of the labour provider.
This new Law differs significantly from the
previous KepMen No. 150/2000 in termination
packages, especially due to major employee
mistake (Article 158, paragraph 3 and 4),
resignation (Article 162, paragraph 2), and
absence without leave (Article 168, paragraph 3).
In all of those terminations, employers do not pay
Severance nor Service pay, in contrary to the
previous KepMen No. 150/2000.
2. Bipartite Forum
Bipartite Forum functions as a vehicle to both
management and employees to create two-way
communication to discuss labour issues in the
company. Every company employing 50 workers
or more is obligated to form a bipartite forum,
where representatives of workers at the forum be
elected democratically. Procedure in forming a
bipartite forum will be further regulated by a
Ministerial Decree.
Within the new Labour Law, if employees commit
major mistakes, such as deception, theft, or
embezzlement, employers can terminate the
employment without permission from the local
Office of Manpower, as long as the mistakes can
be proven and supported by evidence as follows:
3. Long Leave
After working for 6 (six) years continuously at the
same company, employees are entitled to a long
leave for 1 (one) month, to be taken in both the
seventh and eighth years and to every multiple of
6 (six) years of service. Workers shall no longer be
! Worker was caught in the act
! A confession from the worker or
! Other evidence in the form of an incident
report made by the authorized party in the
company concerned and supported by at
least 2 (two) witnesses.
There are also some points that differ from the
previous regulations, in the areas of outsourcing,
bipartite forum, long leave, union majority issues
and strikes. An overview of the new regulation on
the above are as follows:
1. Outsourcing
Companies may outsource a part or parts of the
implementation work to other companies it
implemented through a contractor agreement
made in writing. The subcontracting company
must be a legal entity and registered. There are 2
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REPORT
1 (one) union, the union to represent the workers in
negotiation is the union with members of more than 50% of
total workers. When necessary, unions can form a coalition
to reach the total membership of more than 50% of the
total workers, in order to represent the workers..
entitled to his/her regular annual leave within these 2 (two)
years. The Minister of Manpower will regulate which type
(s) of company to be required to provide the long leave.
4. Union Majority Issues
In negotiating draft agreements of the collective labor
agreement with the company, the labour union has the
right to represent workers if its members consist of more
than 50% of total workers. If there is only 1 (one) labour
union in the company, but its members are less than 50% of
total workers, then, the union can represent the workers if
the union has the support from more than 50% of total
workers through a voting process. In the event of more than
5. Strikes
If negotiations between the management and union fails,
the union may go on a strike. In this event, the union must
give written notice to the management and related
government agencies, at least 7 (seven) working days prior
to the date of the strike. The management of the company
and related government agencies are obligated to give an
acknowledgment receipt after receiving the strike
notification letter from the union.
In the event where workers conduct a legal strike in
pursuing normative rights which have been violated by the
company, the workers are entitled to continue to receive
wages. The company is prohibited from replacing the
workers who are on strike with other workers from outside
company or imposing sanction on the workers during and
after the strike.
Building confidence of the Japanese investors to Batam
Japanese investors have been playing a significant role in
the industrial growth in Batam making Japan the third
largest investor in the region. Therefore, to attract more
Japanese business people to invest in Batam, the Batam
Industrial Development Authority (BIDA) is taking new
ways to build confidence of other Japanese business
people by conducting seminars in Jakarta as many of
Japanese business association is based in the capital city
of Indonesia. The Seminar of “Development of Japanese
Investment in Indonesia” was held at the Hilton Hotel
Jakarta on May 22, 2003.
The seminar was attended by members of the Jakarta
Japan Club and the Japanese Small Medium Enterprises
with total participants of 75 people. The speakers included
Mr. Ismeth Abdullah, the Chairman of BIDA; Mr. Hajime
Kinoshita, BIDA Liaison Offcer in Osaka, Japan who
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delivered the advantages of investing in Batam where they
mentioned the strategic location and duty free incentives
as investors' main reasons in conducting their businesses
in Batam. At the event, Mr.Sawada Shugo, Silver Expert of
JICA to BIDA gave a thorough presentation on the recent
developments and investment opportunities in Batam
today.
According to a questionnaire survey distributed to the
participants, Batam gained a positive response and
feedback, where 75 % of participants are considering
Batam for their future investment. A visit of the Japanese
companies to Batam is being arranged so that they may
observe the real Batam as well as gain insights and
experience from other Japanese companies already
invested here in Batam.
REPORT
SCI Investment Mission
More than 30 members of the Singapore Confederation of
Industries (SCI, now known as the Singapore
Manufacturers’ Federation: SMa Federation) participated
in the one-day trip to Batam on 14 May 2003, held in Turi
Beach Resort, Nongsa. This meeting was jointly organized
by the Batam Industrial Development Authority (BIDA) and
the Kabil Industrial Estate (KIE). Participants were given
an opportunity to personally meet and discuss the
investment climate with the Deputy Chairman for
Operations of BIDA, Mr. Benyamin Balukh and other BIDA
high-ranking officials. By the end of the discussion,
delegates have gained valuable insights on new decisions
of the government on foreign investment as well as
investment security in Indonesia especially in Batam.
visiting several manufacturers within the Kabil Industrial
Estate (KIE) such as PT. Poly Allied Indonesia (Garment),
PT. DSAW (Steel Pipe Plant), PT. Citra Tubindo, PT. Hydril
Indonesia, PT. Imeco Inter Sarana.
This event was to kickstart a working partnership between
BIDA and the SMa Federation after the signing of MOU for
investment cooperation early this year. More investment
and trade missions are expected as both parties are
committed to promote the economies of both countries in
the spirit of the ASEAN common good.
SCI Investment Mission has a particular significance,
because it was the first Singapore business mission
conducted after the SARS (Severe Acute Respiratory
Syndrome) outbreak in the region.
Members of the delegation also had an opportunity to
catch a glimpse of the investment climate in Batam by
Business Investment Forum
According to a survey conducted by the Political and
Economic Risk Consultancy (PERC) Pte. Ltd, Batam is
ranked third as a low investment risk of 4.87 after
Singapore and Malaysia from 9 investment destinations in
Asia Pacific. As a follow up to the survey, PERC Ltd in
conjunction with the Batam Industrial Development
Authority (BIDA) hosted a discussion forum for
Multinational business executives regarding Batam on
May 27-28, 2003 at one of the beautiful beach resorts,
Nongsa Point Marina. The main purpose of this business
forum is to give in-depth information about the investment
climate in Batam to the investors from Hong Kong, the
United States of America, Germany, and Japan.
Besides inviting these foreign executives to Batam, the
meeting was also designed to give inputs and suggestions
to the Government of Indonesia to support the investment
development in some of the strategic business
destinations in Indonesia as well as in the spirit of
Indonesia Investment Year 2003 launched by the
President Madame Megawati Soekarnoputri in February
2003.
Speakers of the business forum included the Managing
Director of PERC Ltd, Mr. Robert C. Broadfoot; the
Chairman of BIDA, Mr. Ismeth Abdullah; Chairman of the
Indonesia Investment Coordinating Board (BKPM, Badan
Koordinasi Penanaman Modal), Mr. Theo Tumeon; the
Commissioner General Police for Investigation of the
Republic of Indonesia, Mr. Erwin Mappaseng.
As the Guest of Honour, the Coordinating Minister for
Economics Affairs of the Republic of Indonesia, Dr.
Dorodjatun Koentjoro-Jakti, presented five reformation
programs of the Government of Indonesia, i.e. political,
bureaucratic, economic, legal and land reformations. This
is to ensure a full economic recovery of Indonesia in the
midst of its struggle.
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REPORT
Dignitaries Visit
Ahmed Salem Al-Wahishi (Ambassador for the Republic of
Yemen), and Dr. Toufic Jaber (Charge d'Affairs of
Lebonan). Whilst, some of the countries representatives
included the Republic of Iran, Kingdom of Jordan, Kingdom
of Morocco, Nigeria, Sudan and the Republic of Tunisia.
The visit was also attended by a Sudanese company
already operating in Indonesia.
Besides Eastern and South-Eastern Asian countries,
Batam is now also attracting countries from the Middle
East and Africa. This interest as signified by the visit of
representatives of 13 countries to Batam on June 5, 2003,
to know about the investment opportunities in Batam.
This official visit was a kind gesture from the Chairman of
the Batam Industrial Development Authority to further
promote and introduce Batam to the Middle East and
Africa. This visit has also produced a positive result to
Batam indicated by the opportunity to cooperate in the
development of Batam. Hence, more official visits are
expected in the near future not only for the cooperation
possibilities but also to maintain the friendship and social
relationship between Batam and foreign countries.
Some of the delegates were H.E Mr. Abdul Rahim
(Ambassador for Afghanistan), H.E. Mr. Ali Abdullah
Alrashdi (Representative, Sultanate of Oman), H.E Mr.
Syed Mustafa Anwer Husain (Ambassador for Pakistan),
H.E Mr. Ribhi Y. Awad (Ambassador for Palestine), H.E Dr.
Indonesian Environment Week 2003
In the celebration of the World Environmental Day and as a
concern for the preservation of natural resources, an
exhibition of the Indonesia Environment Week 2003 was
inaugurated by the Vice President of the Republic of
Indonesia, H.E Hamzah Haz accompanied by the Minister
of Environment Analysis on June 19-22, 2003 at the
Jakarta Convention Centre.
Batam as one of the largest industrial zones in Indonesia
also strongly supported this exhibition by displaying
environmentally friendly products in Batam. Currently,
Batam has 20 companies who support the preservation
areas and programs. The Expo was designed as a venue
to inform, disseminate and support the development based
on environmental friendliness. There were 61 companies
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and government institutions which took part in this Expo
including BAPEDAL (Badan Pengendalian Dampak
Lingkungan, Environment Analysis and Control Agency),
PT. CPI (Caltex Pacific Indonesia), Batam Industrial
Development Authority, WWF Indonesia, PT. Sucofindo
(Superintending Company of Indonesia), Inform
(Indonesia Forest & Media Campaign), and The Nature
Conservancy.
A variety of programs were also held to attract more visitors
and attendees such as the Business Forum, Forum on
Good Governance, environment education conference,
debate contest among senior high schools, poem reading
and drawing competition and song writing contest with the
theme of Environmental Week.
REPORT
Awal Bros Hospital
Batam has another new hospital with international
standard named Awal Bros Hospital, which was
inaugurated by His Excellency the Minister of Health of the
Republic of Indonesia, Mr. Achmad Sujudi on June 26,
2003. This ceremony was also attended by Dr. Adjit Singh,
the Consul of the Consulate of the Republic of Singapore
to Pekanbaru, Indonesia; Mr. Ismeth Abdullah, the
Chairman of BIDA; Mr. Asman Abnur, the Vice Mayor of
Batam; and Dr. Puardy Djarius, the Head of Batam Health
Department. Awal Bros has added another excellent
health facility to the four existing hospitals in Batam (BIDA
Public Hospital, Budi Kemuliaan Hospital, Harapan
Bunda Hospital, and Elisabeth Hospital) to serve the
island with a total population of 533,521 people and 2,517
expatriates living in Batam (December 2002).
Awal Bros Hospital in Batam is a branch of the main
hospital in Pekanbaru, the capital of Riau Province which
is owned by Mr. H. Awaloeddin, a well known
businessman in Indonesia. He has strong concern to
provide first class health services locally. Awal Bros Hospital
has been certified with ISO 9001 Certification from the
United Kingdom Accreditation Scheme (UKAS) United
Register of System (URS) on the International quality
standard measurement.
The hospital on the 1.8-hectare land is located at a strategic
location in the heart of Batam in Batam Centre. It is
equipped with modern technologies and facilities including
CT Scan (Computerized Tomography Scanning), X-ray,
USG, Doppler, Fluoroscopy, and Kidney Renal
Replacement Therapy. There are 225 beds for hospitalized
patients consisting of different classes with 24-hour doctors
available in the hospital.
Health care in Batam has improved since both private and
public medical facilities are widely available to its residents
and visitors. It has become one of the health centers for
medical treatment to the neighboring provinces.
New Cooperation In Agricultural Industry In Batam
According to investment data, percentage of agriculture
industry up to December 2002 was very low, standing at
only 1 % of the total investment in Batam. Batam’s
Department of Agriculture shows that most of the
agricultural products, including fruits consumed in Batam
are imported from Singapore, and Johor, Malaysia which
supply 75 % of the total demand in Batam.
the tourism area of Waterfront
City) with cultivation of
seedless Guava, Jackfruit,
Honey Star Fruit, Exotic
Papaya as well as
development of Fruit
Agricultural Training Centre.
As the industrial development agency, the Batam Industrial
Development Authority (BIDA) feels the needs to improve
this particular industry. Therefore, after a field study to a
farm and cultivation model in Ipoh, Malaysia on August 29
-30, 2002 together with the Crystal Agrotech Co.Ltd.
Malaysia, Batam has established a new cooperation in the
fruit farming development and agricultural tourism area on
July 14, 2003 in Jakarta.
Cooperation of BIDA with
Crystal Agrotech Co. Ltd was
developed because of its 25
years of experience in fruit cultivation with an international
network. Their expertise include nursery development,
training development and export market in East Asia and
the Middle East. Has contributed in this project by
providing financial incentives, infrastructure and
supporting facilities as well as land allocation in the area.
With this new cooperation, Batam will be one of the
suitable locations for future fruit cultivation in Indonesia
The Agreement comprised of fruit farm development on
approximately 60-Ha land located in Sei Temiang (close to
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REPORT
International Intelligence School
The idea of establishing an international intelligence
school in Indonesia was raised when the President of the
Republic of Indonesia Madame Megawati Soekarnoputri
attended the Multilateral Conference Intelligence ASEAN
in Jakarta. Batam was then appointed as the ideal place for
the purpose because of its strategic location in South East
Asia, which is in the neighborhood with other countries, i.e
Singapore and Malaysia.
The Intelligence School which is headed by Mr. A.M
Hendro Priyono, the Head of State Intelligence Agency
(BIN, Badan Intelijen Negara) has the main purpose to
produce high-qualified intelligence personnel as well as
establishing the center of excellence in Indonesia with
international standard. The school is in cooperation with
the University of Indonesia for developing the curriculum
and education system as well as the Bandung Institute of
Technology to develop information technology systems.
The school offers Bachelor and Master degrees at
completion.
The proposed location in Batam is in Nongsa, the eastern
coastline of the region. The ceremony of the laying of the
foundation stone was inaugurated by President Megawati
Soekarnoputri on July 9, 2003. Although students and
applicants will be limited, in the future, it may also be
opened for the public.
President Megawati Inaugurates New Industrial Estates In Batam
As a growing industrial region, Batam has gained a high
foreign confidence, which is indicated by the increasing
foreign investment growth. In the year 2002, there were 80
new multinational companies investing and operating in
Batam with an investment value of US$ 220 million. Batam
has become a very competitive industrial area in Asia
Pacific with the current presence of 611 foreign companies
representing 34 countries.
Batam also provides industrial estates with modern
facilities to support industrial activities. With a steady
inflow of investment, Batam has become a dynamic
industrial region, signified by the development of new
industrial estates, which were launched by H.E President
of the Republic of Indonesia Madame Megawati
Soekarnoputri on July 9, 2003 in Panbil Industrial Estate,
Muka Kuning, Batam, in cooperation with the Batam
Industrial Development Authority (BIDA).
At the event, Madame President Megawati Soekarnoputri
inaugurated six industrial estates of Panbil Industrial
estate; Bintang Industrial Park II; Tunas Industrial Estate;
Citra Buana Center Park I,II, and III; Kabil Citranusa Park;
Latrade Industrial Park and the expansion of the largest
electronics company PT. Sat Nusa Persada. In her
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inaugural speech, Madame Megawati said new industrial
estates were needed to support economic growth, to
create job opportunities and to increase revenue
particularly in Batam. Her statement was also supported by
Mr. Ismeth Abdullah, the Chairman of BIDAwhen he stated
in his speech that Batam has gained more calls and
investors' interest has been revived especially after the
SARS outbreak has been overcome and expected more
new foreign companies to be established in the region.
This event signifies that the government of Batam
supported by the Central government of Indonesia is fully
committed to assist any investors who investing in Batam
to create a comfortable and reliable environment to those
foreign investors.
REPORT
Be Insured For the Future
Insurance is becoming inseparable in the life of the people
nowadays due to the many world uncertainties. With a
population of more than 570,000 people and 2,400
expatriates living in Batam, the demand for reputable,
trustworthy, beneficial and dependable insurance is widely
sought. Realizing this, the Zurich Financial Services
Group, one of the leading insurance-based financial
service providers in the world opened up its branch in
Batam on May 3, 2003.
Having the headquarters in Zurich, Switzerland with offices
in 60 countries (14 in Asia) and more than 130 years of
experience, the insurance company has combined
financial stability with an ongoing quest for innovation and
an uncompromising commitment to provide quality, caring
services to its customers. Although, the branch was
recently established, it already has 40 customers
comprising of local community, expatriates, and foreign
companies in Batam. The most favorable insurance sold
here are Zurich Investment and ZuRich Link among others,
which include the Retirement Fund, Medical, Life,
Education, Travel-safe, Accident, and Home insurance.
Supported by qualified financial consultants, staff and online computer system, Zurich Batam is committed to serve
the people in Batam and vicinity with world-class service
and quality. For further information on Zurich Insurance,
please contact Ms. Mei Ling, Komplek Nusantara Golden
Blok C/6, Jl Engku Putri, Batam Centre, Batam 29432,
Phone : (62-778) 7021193, Fax. (62-778) 455871
What a way to relax!
spas is the Tea Tree Spa in Holiday Inn Hotel & Resort. This
spa serves innovative signature treatments, massage and
beauty services using the latest European products for
refreshing organic facials and cleansing programs. In the
Tea Tree Spa, you can discover a spa experience like no
other as you slip into a world of relaxation, soothed by the
gentle caress of soft music and fragrant oils.
In today's world, with the high
level of pressure and
anxieties, many people are in search for an oasis of
tranquility, a place where you can relax, breathe fresh air,
restore your physical and psychological equilibrium, and
Batam's luxurious spas provide just that.
Currently, there are approximately 15 spas and massage
centres available in Batam. One of the famous modern
Another type of spa is the traditional Javanese Spa in
Martha Tilaar featuring art facilities and warm professional
services, with an array of traditional herbs and unique
treatment that were once an exclusive privilege for the
select few in the royal palace.
Spa is an excellent place for busy businesspeople or
anybody who would like to be pampered. So, whenever
you feel stressed, revive yourself with a spa experience in
Batam, with prices ranging from S$ 70-S$ 300 per visit.
Panbil Mall
Another big shopping centre has opened recently in
August 2002, located in the industrial area of Panbil
Industrial Estate in Muka Kuning. The three storey building
on the 2,400 m2 area of Panbil Mall is one of the largest
and most luxurious shopping centres in Batam. More than
800 shops have already occupied the spaces, where the
rent of each shop depends on the location, with rental
starting at S$ 35/m2
The shopping mall is very convenient for both the local
community and foreign nationals who live in the region, as
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REPORT
the place provides a variety of consumer needs like the
department stores, bookshop, beauty centres, optical and also
amusement centres as well as the rich variety of food selection
from local to International dishes.
Panbil Mall also provides spaces for exhibitions located on the
first floor. Some of the expo’s which have been conducted are the
“Indonesia Market Fair” 2003 and ceramics exhibition from
China. With visitors reaching up to 10,000 people monthly, Panbil
mall has become one of the favourite places to hang out. Shall we
visit tonight?
Free Trade Agreement between USA and Singapore
How Batam can benefit from it
A Free Trade Agreement (FTA) has been completed between the
United States (USA) and Singapore to promote the bilateral trade
relationship between the two countries. The Agreement was
signed by the US President George W. Bush and Singapore
Prime Minister Goh Chok Tong in the United States on May 6,
2003. This is the first free trade agreement between the US and
an Asian country. This Agreement will improve on bilateral
transactions and trading, such as goods (trading and
manufacturing), services (financial and legal), and intellectual
property. Singapore’s Ministry of Trade and Industry estimates
that tariff savings for non-textiles products will be between S$ 200
- 300 million.
Batam and Bintan, the two Indonesian islands nearby Singapore,
throughout the discussion have been mentioned numerous times
as areas that may benefit from the Free Trade Agreement. How
can these two Indonesian islands benefit from the Agreement?
This FTA is between the US and Singapore, as the two countries
involved. Thus, it does not include the Indonesian islands in the
text of the Agreement. This Agreement has the breakthrough by
including the Integrated Sourcing Initiative (ISI), which applies to
non-sensitive, globalised sectors, such as IT - on 266 products.
Through this initiative, products deemed as Singapore goods can
be and will be treated as originating from Singapore. This means
that these goods, manufactured in Batam, can enter the US
market duty free and will be exempted from the Merchandise
Processing Fee (MPF). This means that importers in the USA can
waive the MPF, which is payable at 0.21% on FOB Value of goods
to the US Customs. They can also enjoy faster customs
clearance.
To be treated as products originating from Singapore, goods from
Batam have to be exported through Singapore. A Singapore
consignee is required in this case.
These products, such as magnetic disks, semiconductors,
printed circuits, various electronic components, parts and
accessories of various equipments, medical equipment, are listed
in Annex 3B of the Free Trade Agreement. For more information,
please refer to the Free Trade Agreement, also available on the
website of the Ministry of Trade and Industry of Singapore at
www.mti.gov.sg.
Currently, Batam's Representative of the National Investment
Coordinating Board (BKPM) has identified over 150 foreign
companies in Batam manufacturing products that may benefit
from the FTAthrough the ISI scheme.
BATAM REPORT
Published by: Batam Industrial Development Authority, Patron: Chairman of BIDA, Deputy for Administration & Planning, Deputy for Operation, Deputy for Supervision & Control,
Publisher: Bureau of Marketing and Public Relations, Executive Supervisor: Tri Novianta, Chief-Editor: Riatna Jeo, Editors: Geoff Page, Ariastuty Sirait, Novrita, Lay-Out:
Ilham Eka Hartawan, Dendi Gustinandar Administration & Circulation: Marketing Division, Address: Jakarta: D.I. Panjaitan Kav. 24, Jakarta 13410 Indonesia, Tel. (62-21)
8580009-11, 8580034, Fax. 8580038; Batam: Batam Centre, P.O. BOX 151, Batam Island 29400, Indonesia, Tel. (62-778) 462047-48, Fax. 462456, 462240, 462432. The content
does not necessarily reflect the view or policy of BIDA unless clearly stated. Parts of content may be quoted by permission from the publisher. Published Quarterly.