Investing in Batam, The Emerging Business Hub of Indonesia

As a part of the Making Indonesia 4.0 effort to digitize a number of industries in the country, The Ministry of Industry encourages Batam to develop several electronic industrial clusters as the business hub emerges.

Batam, known to many as a port city, has always focused on developing its shipping infrastructure. Batam’s industries are highly affected by volatile oil prices – making this one of the city’s most significant challenges.

With Batam’s economic growth consistently higher than 2%, the city is being prompted to boost its electronic-based industry to make it more competitive. There is also potential for growth in the maintenance, repair, and overhaul (MRO) industry.

Since the city is essentially a melting pot of electronic manufacturers and producers of many different components, the Indonesian Coordinating Minister for Economic Affairs believes that Batam has an opportunity to grow its electronics industry massively.

Aside from electronics, Batam is also home to Batam Aero Technic (BAT) under Lion Group, an aircraft maintenance and repair company located in the Hang Nadim Airport area. Situated on over 28 hectares, the workshop also facilitates aircraft testing.

With the significant growth of the aviation industry, the MRO business can help reduce the aviation industry’s costs, such as importing components from abroad. Seeing the government working to push the Indonesian MRO industry is just one more example of how Batam can become a business hub in Indonesia.

Batam’s competitive advantage is the newly added fiber-optic network and an IT center that provides 24-hour support in the event of a disaster. Investors looking for a place with good mobility, access, and potential growth would be unwise to sleep on Batam as it is well on its way to becoming the next attractive Indonesian business hub to invest in.

Establishing Batam as a New Business Hub

Clean Energy Industrial Park

Indonesia’s efforts to effectively handle the Covid-19 pandemic have resulted in around 7% YOY economic growth in Q2 2021. The government has decided to optimize all regions to their utmost potential by assigning core business and priority programs.

Batam is an International Logistics Hub to support the development of integrated and competitive industry trade, maritime, and tourism. The Indonesian government is optimistic about growing the Batam economy by 6.5% in 2021-2025 after investing up to IDR 100 trillion yearly. The government brought up this detailed plan comprised of comprehensive short, medium, and long-term targets for 25 years during the Investment Award event organized by the Batam Business Board.

Batam has been chosen as the International Logistics Hub Industry along with e-commerce, Aerospace Industry, Digital Industry, and Integrated Health Tourism, among many others. Coordinating Minister for Economic Affairs, Airlangga Hartato, said that this process is also an effort to make Batam a leading area in developing renewable and green energy.

This is why support and participation from all economic activists and stakeholders are needed to pitch innovative ideas and breakthroughs to accelerate the development, which will attract foreign investment in Batam.

Positive Investment Trend in Batam

Muhammad Rudi, the Head of the Batam Free Port Free Trade Area, has stated that investment in the local area has shown positive signs of growth as the COVID-19 pandemic is getting better control. He also mentioned that several investors had started early stages of communication to reveal their plans to invest in Batam.

Muhammad Rudi has received numerous visits from the Danish and Belgian embassies to discuss investment matters. In addition, foreign and domestic investors have all started applying for permits to invest in different sectors of Batam.

The general tip when applying for permits is to consult with a local agency like InCorp, which already has a multitude of experiences when acquiring permits for businesses to set up their services in Indonesia. Check out how InCorp can help to get a business license here.

Energy investment in Batam is one of the most attractive investment opportunities for many investors, mainly electricity production using renewable energy. As part of the Government of Singapore’s plan to supply electricity with non-fossil energy from various other countries, Batam serves as the perfect place due to its distance to Singapore.

Investors building power plants in Batam will also help the area benefit from the electricity supply of renewable energy, making Batam greener.

The Birth of Nongsa Digital Park

Nongsa Digital Park serves as a government-to-government collaboration between Indonesia and Singapore to encourage the development of the digital industry in Batam. Their Free Trade Zone status involves tech-friendly infrastructure, including independent power stations, data centers, and broadband connections, making it an even more attractive site.

With this collaboration, Indonesia and Singapore look to achieve a positive outcome in planning the next phase of the digital economy. With both countries’ public and private sectors mutually benefiting from this project, Nongsa Digital Park has all the ammunition possible to skyrocket in the eyes of investors to set up businesses.

Why Invest in Batam?

One main feature that Batam firmly holds as a business hub is that the city has a Free Trade Zone area which only a limited number of cities in Indonesia have. Batam has the specialty of getting a free trade area because of its diverse industrial base and high economic value.

The free trade zone system in Batam is attractive to potential investors. Commonly abbreviated as KPBPB, Batam has the flexibility to regulate investment affairs and is given a delegation of authority by the central government regarding the issuance of investment permits.

This licensing under Batam’s authority also covers a variety of sectors, namely ports, health, trade, etc. This, combined with excellent infrastructure, indeed increases the enthusiasm for investment opportunities in Batam.

When looking at the possibilities for growing a business in Batam, it is impossible to first look at the most critical aspects of establishing the business itself. When starting a business, contacting professional market entry consulting firms like InCorp is essential so that you can focus on registering your company from scratch with the lawful use of legal loopholes.