REPUBLIKA.CO.ID, BATAM -- Leading economic observer Faisal Basri said the performance of the Batam, Bintan and Karimun Free Trade Zone of the Riau Island province had been disappointing with imports larger than exports in value.

The status of free trade zone (FTZ) was designed to be an industrial center to produce manufactured products for exports, Faisal said in a seminar here on Tuesday.

So far the FTZ has served only as an assembling place for foreign goods, Faisal said.

Almost all components of products of the FTZ are imported, assembled in the area to be exported, he said, adding, imports, therefore, are larger than exports.

In addition, import duty exemption requested by the provincial administration and the FTZ had driven the local people to be more consumptive.

The Riau island province has asked for special facility to increase consumerism instead of productivity, he said.

He said based on data from Bank Indonesia , consumption in the province grew 10 percent exceeding the national average of 5 percent a year.

He said the province's high economic growth was driven mainly by consumption not by production.

He said the province recorded no growth in investment, adding foreign investment was flat.

He said in order to boost the FTZ economy as expected, the government should focus on the comparative advantages of Batam being strategically located and its maritime strength.

"Batam is attractive because of its location being closed to world economic centers like Singapore and China. Batam could gain by producing what Singapore needs," he said.

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