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Batam at a Glance

Batam is strategically located within an international shipping route between the Indian and the Pacific Ocean. It lies only 20 kilometers to the Southeast of Singapore which has one of the busiest seaports in the world. A ferry ride to Singapore takes only 40 minutes.

The area of Batam Island is 415 sq.-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 surrounding islands, hence, giving a new name: Batam-Rempang-Galang or Barelang. The total area became 715 sq.-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 serve four main functions, namely: industrial, trade, tourism, and transshipment area. The whole area of Batam, Rempang and Galang is also declared as bonded area. All imported goods for production purposes, such as capital goods and raw material, are exempted from import tax. Batam is build 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.

Why invest in Batam

As at the end of December 2005, Batam has accumulated a total of approximately US$ 11.89 billion in investment comprising of US $ 2.34 billion (19.68%) of government investment and US$ 9.55 billion (80.32%) of private investment. Government investment is in terms of infrastructure development. Private investment comprises further of 57.28% or US$ 5.47 billion of domestic investment and 42.72% or US$ 4.08 billion of foreign investment. More than 813 foreign companies are operating in Batam while the number of local companies is nearly 10,000.

There are approximately 685,787 people living in Batam, coming from all over the Indonesian archipelago with 225,915 people employed in the formal sector, and 76,000 more in the informal sector. This labor is increasingly bettered skilled as they have years of training and experience. This skilled labor can be sourced directly in Batam, without the need of recruiting from other regions, such Java and Sumatra. Half of the population in Batam are workers, making a very healthy dependency ratio.

Foreign investment application is processed with a one-stop policy in Batam and takes not more than 20 days to get approval. All permits and licenses required to start development are also processed “under one roof” by the Batam Industrial Development Authority with streamlined procedures. Companies are allowed to have 100% foreign ownership. Staying permit for foreigners working in Batam is easy to obtain from the local Immigration Office. Foreign visitors to Batam will be given Visa on Arrival for most nationalities. Foreign nationals are allowed to buy and own houses, whether or not they work in Batam. So, Batam could become a second home for foreigners.

Modern Facilities

More than 1,153 km of paved roads and highways are there to link all centers of activities. These roads are continuously being improved with the addition of lanes to anticipate the rapid growth of traffic. Traffic jams are nowhere to be seen even at peak periods. 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 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 meter 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 20 flights daily to Jakarta, and 252 flights weekly to other major cities in Indonesia. The terminal building has a total floor area of 31,500 sq.-m and will gradually be expanded to its ultimate design of 88,000 sq.-m.

Telecommunication facilities are also of the highest standard with state-of-the-art technology which has used only 90% of the available capacity. One does not feel isolated in Batam since communication to all parts of the world is only one button away. 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 3,960 liters/second. Supply of clean water is sufficient to support a population of 700,000 people and industry and has conformed to the standards of the World Health Organization and currently runs at a capacity of 2,185 liters of clean water per second.

Investment Facilities

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

Investment Incentives

Competitiveness of Batam can be obtained through some incentives offered:

	No import/export duties on machine, equipment, spare parts, raw materials in the bonded zone industrial parks in Batam.
	No VAT for all processing industry for export purposes. If the manufactured products are sold in other non-bonded parts of Indonesia, they will be subjected to 10 % of VAT. However, effective from January 1, 2004, VAT and or Sales Tax on Luxury Goods shall be imposed on three products of Motor Vehicles, Cigarettes and other tobacco products and alcoholic drinks; and effective March 1, 2004, VAT and Sales Tax on Luxury Goods shall be imposed on all kinds of electronic goods using batteries or electricity.
	GSP (Generalized System of Preferences) facility with 33 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 52 countries.

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