Jakarta. Batam, Indonesia's free-trade island city near Singapore, is turning to the craft, filmmaking and tourism industries for a much-needed boost to rejuvenate its economy.
The Batam Indonesia Free Zone Authority (BP Batam) and the National Creative Economy Agency (Bekraf) signed a memorandum of understanding on Thursday (06/09) to collaborate on developing the island's creative industries.
"Batam is a city with extraordinary potential, both in terms of tourism and its economy. Batam is only 45 minutes from Singapore by fast boat," BP Batam head Lukita Dinarsyah Tuwo said on the sidelines of the signing ceremony.
Batam was designed to become a free-trade and industrial area to benefit from its proximity to Singapore, Southeast Asia's main trading hub.
The island's industrial complexes, including Batamindo Industrial Estate, Bintang Industrial Park II, Cammo Industrial Park, Indah Industrial Park and Sarana Industrial Point, used to find it easy to attract foreign manufacturers, but rising minimum wages over the past few years have eroded the island's competitive advantage and subdued its manufacturing sector.
Batam's economy only expanded by 3 percent last year, less than half the rate at which it used to grow six years ago, according to the data provided by the local office of the Central Statistics Agency (BPS).
Lukita said Batam has many areas of great natural beauty, which are ideal shooting locations for movies.
He said the island could also become a leading tourist destination and earn foreign exchange for the country. The Great Mosque of Batam, St. Peter's Church and Tanjung Uma fishing village are the most popular tourism destinations on the island.
More than 1.5 million foreigners, mainly from Singapore, visited Batam last year, accounting for about a tenth of Indonesia's total number of foreign tourist arrivals.
BP Batam expects its collaboration with Bekraf to boost development of the creative industry on the island, which may drive further development of labor-intensive manufacturing, such as the art and craft and food industries.
"We submit fully to Bekraf to develop the potential of the creative industry here," Lukita said.
Bekraf chairman Triawan Munaf said the agency is still reviewing creative industries in Batam to select some that can be developed.
"If needed, we will also provide capital assistance," he said.