BATAM, Indonesia India and Japan are seeking special trade status in this government-sponsored industrial zone near Singapore that is dominated by electronics production, according to the head of the Batam Industrial Development Authority.
Ismeth Abdullah, who also serves as acting governor of Indonesia's Riau Islands province, said its Asian neighbors want to create separate industrial parks on the fast-growing island dotted with construction projects and housing developments.
Abdullah said in an interview with visiting U.S. reporters that India in particular would use a Batam-based industrial park as a means of establishing a regional technology presence. One likely focus for an Indian industrial park here would be automotive components manufacturing, Abdullah said.
The proposed industrial parks would also further the Indonesian government's goal of lessening its heavy reliance on manufacturing projects from neighboring Singapore, which lies about 40 minutes by ferry to the northeast across the Malacca Straits. "We don't want to depend heavily on Singapore-based companies," said Abdullah, who is currently campaigning to become Batam's full-time governor.
The Batam authority was created by the Indonesia government about 32 years ago to attract foreign investment to the island. With labor and production costs rising in Singapore and land there scarce, most of Batam's light manufacturing projects and financing have come from Singapore-based Asian companies.
Japan already has a strong presence on the island, manufacturing a range of electronics products. Electronics manufacturing accounts for about 40 percent of Batam's projects, according to the authority.
Electronics manufacturers with operations here include Infineon Technologies, Sony Corp., Philips, Thomson Multimedia and Advanced Interconnect Technologies, a chip test and assembly company.
While there is a heavy Japanese presence on the island, there are so far relatively few Indian companies here. Hence, India's request for its own industrial park is seen as an attempt by the Indian government to drive a stake in the ground as a regional manufacturer, Abdullah said.