Ownership of the island and the resort recently underwent a number of problems and difficulties. Mr K.Y. Ng is a Singaporean and the island in focus is an Indonesian island. Therefore, in terms of ownership and legitimacy, there are some additional issues and legal intricacies to be aware of, aside from the fact that establishing a business operation requires formal endorsements and the procurement of official licenses. Mr Ng partnered with an Indonesian counterpart to help in the management and maintenance of boats to transport guests and supplies, employ staff and to register the company/resort for official licenses (per. comm., Ng, 04/05/07). Unfortunately, this partnership encountered some problems after a period and even resulted in the failure of Coral Cove Resort in possessing official permits or consent required for the legal operation of the resort (Batam Pos Online 23/02/07, Weekend Today 17th - 18th Feb 2007). This failure was apparently attributed to the Indonesian partner absconding with the money meant for registering the company and resulted in the resort not having the required permits or licenses to operate under a foreign investor (per.
comm., Ng, 04/05/07). This created a measure of unhappiness amongst the Provincial Government due to the foreign ownership and management of a tourism enterprise and the sale of an Indonesian island to a foreigner without the apparent knowledge and approval of governmental officials (Batam Pos Online 14/02/07, Batam Pos Online 23/02/07, Republika Online 15/02/07, Weekend Today 17th - 18th Feb 2007).
The resort has been closed since February 2007 to address these legal issues.
A few reasons may be cited for the apparent variation in provincial governmental support and the conflicts experienced. Firstly, the failed partnership between Mr Ng and his Indonesian partner resulted in confusion and problems as expectations of his
partner’s role in the management and operation of Coral Cove Resort were not met, especially with regards to obtaining the required permits and licences. Being a small- business enterprise, with the added characteristic as a foreign-owned enterprise, it was necessary for Mr Ng to develop local contacts to help in the legislative and official processes. His partner, being an Indonesian resident, was supposed to register the company and obtain the relevant licences and permits. He was given money to do so, but did not follow through. The subsequent run-in with the law not only resulted in the resort having to be closed to avoid any potential unpleasant conflicts between the police and guests, but also in Mr Ng having to go through police questionings and the subsequent additional investment costs of setting up a foreign-owned company to obtain the relevant licences and permits as a legitimate owner and manager of Pulau Segayang and Coral Cove Resort (per. comm., Ng, 04/05/07). Mr Ng then sought out aid from a number of governmental officials to help smooth the process out in obtaining the relevant documents and believes that they will give him their support (per comm., Ng, 04/05/07). This incident showcases what was highlighted earlier in Section 4.2.2, on the difficulties in finding trustworthy and reliable middle- management staff, and shows how serious things can turn out when there is a lack of communication and dependability within the operation of a business.
Secondly, it was probably noted that the resort catered almost exclusively to Singaporean guests. The marketing of the resort and the official business company, Lighthouse Adventures Pte Ltd, is located in Singapore, with Mr Ng and his other shareholders being Singaporeans as well. Thus, it may be perceived that this is one enterprise that utilises Indonesian resources (the island environment and local staff) for the benefit of Singaporeans – in terms of having a leisure destination to go to and
the economic profits accrued to the owners. In other words, the island provided leisure space for Singaporeans and is also run by Singaporeans almost exclusively. It is a business formula that seems to mimic other Singapore-Indonesia cooperatives established during the IMS period where projects have extensive financial links to the Singapore economy with minimal dependence on either Riau or Indonesia’s wider economy (Grundy-Warr and Perry 2001). Strong nationalist sentiments in Indonesia have been previously identified as an issue that the IMS growth triangle will have to deal with, especially with Singaporean investments in Riau (Pangestu 1991, p.105);
similarly the foreign ownership of Pulau Segayang has stirred up resentment and unhappiness. This resentment might additionally have been inflamed especially when it was suggested that the entire island was purchased at prices ranging from S$2,300 (14 million Rupiahs) – S$9,300 (Batam Pos Online 23/02/07, Weekend Today 17th - 18th Feb 2007).
Exclusivity towards Singaporean guests was highlighted on several occasions in news reports (Batam Pos Online 2007, Bisnis Indonesia Online 16/02/07) and may not be entirely untrue. Marketing of Coral Cove Resort is mainly geared towards Singaporean guests – the homepage of the resort states a Singaporean telephone number and company for contact and the rates are in Singapore dollars; the resort has tied up with Singaporean tour operators to promote the resort through its Singaporean contacts; and advertising material can be found in Singapore, specifically at HarbourFront Centre and at the ferry counters to Batam to attract potential Singaporean guests. Whilst there may be no apparent exclusion of Indonesian guests should they choose to go, it may be argued that access is highly limited as management and marketing support is based in Singapore.
To address this legal issue, Mr Ng established contact and support from BIDA through showcasing the tourism enterprise that Coral Cove Resort had to offer and highlighting the local benefits of the resort. According to Mr Ng, both the Mayor of Batam and the Governor of the Riau province support his tourism enterprise and are willing to support him. Nonetheless, it was true that the legal documents that Coral Cove Resort was supposed to posses was not obtained at the time of inspection and thus created a minor disturbance to the operation of the resort. Mr Ng has since set up a foreign-owned company in his name to obtain all the necessary paperwork to legalise the resort and have applied for all the necessary licences which include restaurant and accommodation licences (per. comm., Ng, 04/05/07). Once the relevant licences are obtained, the resort will open for operation again, albeit in a different name to address the bad publicity experienced. The newly set-up company is in partnership with a prominent Indonesian businessman, alongside another Singaporean partner and according to Mr Ng, has the backing of many government officials who are aware of his tourism enterprise and have given him their support.
Foreign ownership and legitimacy are thus complex issues to consider for any tourism enterprise and would affect the development of the business model, plus the management and operational momentum of the resort as well. The negative press coverage and the subsequent closure of the resort has been an unpleasant and tiring experience to befall the resort. The experience may also harm the reputation of the resort and undermine the confidence of potential guests. Heightened sensitivity is thus required especially when dealing with issues for foreign land tenure and the establishment of local governmental support is equally pertinent for a successful enterprise. These are issues for any tourism enterprise to consider and the lessons
learnt from this experience will hopefully guide other enterprises in their development plans. Unfortunately, this is still an evolving issue (licences have yet to be approved) and by the negative impact of this incident has shown that though the provincial government may be classified as a regional component within the island tourism development framework, it has become the most important and significant component.