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Map
1

Location

Batam is strategically located within an international shipping cross-route between the Indian and the Pacific Ocean. It lies approximately 20 km to the Southeast of Singapore which has one of the busiest seaports in the world. A ferry ride to Singapore takes only within an hour from 5 ferry terminals located around Batam.

The area of Batam Island is 415 square km. However, due to the progress of investments and demand of space, the Batam Industrial area was expanded in 1992 with the inclusion of two other islands, Rempang and Galang and the smaller surrounding islands, hence, giving a new name: Batam-Rempang-Galang or Barelang. The total area became 715 square km. All the main islands are linked with the Trans-Barelang road, which include six beautiful bridges.

Although dubbed as an industrial area, Batam is developed to four main functions: industrial, trade, tourism, and transshipment area. The whole area of Batam, Rempang and Galang is also declared as Free Trade Zone. All imported goods for production purposes, such as capital goods and raw material, are exempted from import tax. Batam is built to be an export oriented industrial area, so as not to compete with other industrial areas in Indonesia which market their products within the country.

Proximity to Singapore is one of the advantages where investors will not feel isolated in Batam. Batam is developed to take benefit of the progress that has been achieved by its neighbour. Facing land scarcity and high rate of labor wage, Singapore takes advantage of land availability and investment cost competitiveness in Batam. A close relationship between the two Indonesian and Singapore governments has encouraged good cooperation between private sectors on both sides.

2

Demographic

Batam is the largest city in the Riau Islands Province of Indonesia, across the Strait of Singapore, the third-largest city in Sumatra region after Medan and Palembang, and the eighth-largest city in Indonesia after Jakarta Raya, Surabaya, Bandung, Medan, Semarang, Makassar, and Palembang.

As the island develops into a major industrial and tourism area, it attracts an ever-increasing population from other Indonesian islands who see Batam as a heaven of opportunity. Once almost uninhabited, save for a few scattered fishing communities, Batams history took a sharp turn beginning 1969, when it became support base for the State-owned Pertamina oil company and its offshore oil exploration. In 1971 a presidential decree designated it as an industrial area and in 1975 the Batam Authority was formed. In 1978 Batam was established as a bonded area. On January 19, 2009, the President of Indonesia officially declared Batam-Bintan-Karimun as a Free Trade Zone (FTZ). FTZ is a policy exempting facilities from some customs regulations, including taxes and levies. Investors are benefited to start investing and operating in the region

Batam is heterogeneous in the context of Indonesia and is very diverse. The predominant ethnicities are Malays, Javanese, Batak, Minangkabau, and Chinese. As a municipality it exemplifies the national motto of " Bhinneka Tunggal Ika" (Unity in Diversity). The location of Batam close to Singapore is conducive to the development of economic, sociopolitical, and cultural aspects of the local community. By 2016, Batam had a population of approximately 1.5 million inhabitants. The population is increasing rapidly, with a population growth rate of more than 10% per year between in 2016.

Islam is the majority religion in Batam, with 74.25% of the population, followed by Christians (19,8%), Buddhists (5.44%), and Hinduism (0.1%). The Great Mosque of Batam, located in the city center adjacent to the main square, the mayor's office and the provincial Parliament, is an important symbol of Islamic religious life in Batam.

Indonesian is the common lingua franca of Batam in daily use. Malay, Minang, Batak, Javanese, and Chinese ethnic dialects like Hokkien and Teochew are also used, and English is also spoken, especially by expats living in Batam.

City
3

Infrastructure

Besides its strategic location, space availability, labor supply, and government support, Batam has the advantage of having well-developed, modern infrastructures.

More than 1,000 km of paved roads and highways are there to link all centres of activities. These roads are continuously being improved with the addition of lanes to anticipate the rapid growth of traffic. There are three locations of seaport to serve cargo vessels and six locations of passenger ferry terminals around the island to minimize travel times to destinations with more than 100 trips daily serving Singapore and Malaysia. The biggest seaport in Kabil has a berthing capacity of 35,000 DWT (Dead Weight Ton) and is being improved to accommodate ships up to 150,000 DWT. In its ultimate phase, it will have a total wharf length of 5.5 km with an 18 m draft.

The Hang Nadim International Airport has a 4,000 m runway, the longest in Indonesia, to serve wide body passenger and cargo aircraft with many flights daily to Jakarta, and to the major cities in Indonesia. The terminal building has a total floor area of 31,500 sqm and will gradually be expanded to its ultimate design of 88,000 sqm.

Telecommunication facilities are also of the highest standard with state-of-the-art technology, with fiber optic backbone has been installed surrounding the island.Electricity is supplied by PLN, the state-owned electric company, and additional power is also supplied by private power plants.

Fresh water is abundantly available from six man-made water reservoirs built around the island with the total capacity of 3,850 litres/second. Supply of clean water is sufficient  has conformed to the standards of the World Health Organization.

 

4

Seaports

Five existing international seaports passengers operate in Batam :

  1. Sekupang
  2. Teluk Senimba
  3. Nongsapura
  4. Batam Centre
  5. Harbour Bay

One existing local seaport passengers for domestic is Telaga Punggur

Three existing cargo & container vessels:

  1. Batu Ampar
  2. Kabil
  3. Sekupang

 

5

Airports

Hang Nadim International Airport, also known as Bandara Internasional Hang Nadim, is located in Batam, Riau Islands Province, Indonesia. It has been the primary method of transport to and from Batam, alongside ferries to neighboring islands (including Singapore). As Batam continues to develop its tourism sectors, the Hang Nadim has proved a sufficiently effective airport. Hang Nadim has facilities and the longest runway (4,000 m) in Indonesia, sufficient for wide body aircrafts.

 

6

Investment Incentive

Competitiveness of Batam can be obtained through some incentives offered:

  • No import/export duties on machine, equipment, spare parts, raw material. The whole island is dutyfree with no import/export tax on any items.
  • No VAT for all processing industry for export purposes. Unlike other parts of Indonesia, Batam is a bonded zone, thus, does not apply VAT on processing products nor consumption goods and neither does sales tax on luxury goods. If the manufactured products are sold in other non-bonded parts of Indonesia, they will then be applied 10% of VAT.
  • GSP (Generalized System of Preferences) facility with 28 donor countries; also the Common Effective Preferential Tariff for ASEAN countries.
  • Investment Allowance with reduction of income tax for certain industries with various incentives in reduction in calculation of net income, accelerated depreciation, compensation for losses, and lower tax rate considering Double Taxation Avoidance Agreement.
  • Double Taxation Avoidance Agreement with 51 countries.
  • Competitive cost of investment due to competitive tariffs on land lease, labour cost, utilities, and other operating costs.

 

Facilities offered to foreign investment in Batam are as follows:

  • Allowance to establish 100% foreign ownership
  • Streamlined procedure for foreign investment
  • Foreign investment license for 30 years and extendable
  • Simple immigration procedure for expatriates
  • Land lease up to 80 years and extendable
  • Easy import and export procedure