When considering the best business in Batam, it’s important to recognize its strategic location, robust infrastructure, and government incentives, making it a prime destination for various industries.
However, foreign investors often face challenges such as navigating local regulations, dealing with fluctuating labor costs, and understanding the evolving market dynamics.
While Batam has evolved into a business hotspot due to its proximity to Singapore and key shipping routes, these pain points can create barriers for newcomers. Nonetheless, with the right guidance, international investors can capitalize on Batam’s potential and overcome these hurdles.
Why should you choose Batam for business expansion?
One key characteristic that makes Batam a prime location for the best business in Batam is its status as a Free Trade Zone, a distinction held by only a few cities in Indonesia.
Batam’s designation as a free trade area is attributed to its diverse industrial base and significant economic value, making it a hub for international trade and investment.
Batam’s free trade zone system offers an attractive environment for potential investors. The central government has granted Batam the authority to manage investment matters independently and issue investment permits.
This authority extends to various sectors, including ports, healthcare, and trade. With Batam’s excellent infrastructure, this regulatory flexibility significantly enhances its investment appeal.
Investment opportunities and incentives in Batam
Batam offers numerous advantages to foreign investors, making it an attractive destination for manufacturing and technology-based industries. Those are:
Strategic location
- Proximity to international sea routes, specifically the Strait of Malacca and the Singapore Strait.
- Close to ASEAN countries with a combined population of 640 million.
- It is only 20 km from Singapore, with a travel time of 45 minutes by ferry.
Attractive incentives
- Exemption from import duties on machinery, equipment, raw materials, and spare parts used for export-oriented production.
- Exemption from VAT and luxury tax on machinery, equipment, raw materials, and spare parts.
- Exemption from Article 22 Income Tax on machinery, equipment, raw materials, and spare parts imported for production purposes.
- Generalized System of Preferences (GSP) offers reduced import duties for export products from recipient countries.
- Agreements with 56 countries to avoid double taxation.
Modern infrastructure
- The international airport in Batam has the longest runway in Indonesia, at 4,025 meters.
- Five international passenger ports and four cargo ports.
- Six bridges connecting Batam, Rempang, and Galang.
- Seven reservoirs, with a total capacity of 3,535 liters per second, are available to meet industrial and consumer needs.
- Wastewater treatment facilities with 230 liters per second are designed to separate biological and chemical waste from water.
- Installed electricity capacity of 538.95 MW.
- 1,670 km of constructed roads.
- Telephone capacity of 111,700 lines and a fiber optic internet backbone reaching 1 Gbps.
- IT service center at BP Batam has disaster recovery capabilities.
Competitive investment costs
- Particularly favorable for export-oriented industries.
A clean and healthy environment
- Balanced distribution between green areas and industrial zones.
Security and comfort
- Batam is a melting pot of Indonesia, ensuring a secure and comfortable living environment.
Read more: Top 10 Batam industrial parks for foreign investments
Top 7 best businesses in Batam to start
The Batam Authority (BP Batam) Vice Chairman, Purwiyanto, has outlined the agency’s strategic vision up to 2045, highlighting seven key sectors important for investors looking to establish a profitable business in Batam. These sectors align with Batam’s current conditions and growth potential, making them prime areas for long-term investment.
An international logistics hub
This province is being transformed into an international logistics hub through developments at Batu Ampar Port, which are opening up significant business opportunities in Batam for investors in logistics and trade.
This strategic development enhances Batam’s role in global supply chains, making it an attractive location for businesses seeking to capitalize on its growing infrastructure.
Aerospace industry
For the aerospace sector, Batam houses the Batam Aero Technic Special Economic Zone (BAT SEZ), which has expertise in aircraft maintenance, repair, and overhaul (MRO), including facilities for Lion Air.
This makes aerospace one of the most popular businesses in Batam, attracting major industry players and boosting the island’s reputation as a hub for aviation services.
Light and high-value industries
Heavy industry in Batam is primarily led by sectors such as shipbuilding, fabrication, steel, and metal production. In contrast, the light industry encompasses manufacturing, electronics, garments, and plastics.
Digital and creative industries
In the creative industry, Batam’s Nongsa Digital Park Special Economic Zone (NDP SEZ) focuses on film, animation, data centers, and other digital industries.
International trade and finance
Batam’s prime location near key international shipping lanes, including the Strait of Malacca and the Singapore Strait, and its proximity to ASEAN nations with a combined population of 640 million makes it an ideal hub for global trade and finance.
Integrated health tourism in Sekupang
The recently approved International Health Tourism SEZ in Sekupang covers 47.17 hectares, with expected investments of IDR 6.9 trillion. This zone will feature healthcare facilities, an international nursing academy, a MedTech Park with MICE facilities, doctors’ housing, dormitories, hotels, and retail spaces.
New and renewable energy sector
In alignment with Indonesia’s goal of achieving net-zero emissions by 2060, Batam plans to develop green industries and their ecosystems, including the Rempang Eco-City.
How can I start a business in Batam?
If you’re looking to invest in the best business in Batam, you must obtain the necessary permits to ensure legal protection for your business operations. Here’s a brief overview of the investment process:
Business plan
Investors should develop a comprehensive business plan that outlines their objectives, plans, and financial projections. This will not only act as a roadmap for their venture but also demonstrate to stakeholders, including local authorities, the feasibility and potential success of the business.
Business plan presentation
Once the business plan is developed, investors can prepare and present it to BP Batam, the governing body responsible for the Batam Free Trade Zone. This presentation formally introduces the investment to local authorities and helps secure initial approval to proceed with the venture.
10% down payment
A down payment of 10% of the total investment is required to secure the land allocation and prevent potential abandonment. This payment demonstrates the investor’s commitment to the project and ensures that the land is reserved exclusively for their business activities.
Obtaining necessary permits
Investors must secure the necessary permits to operate legally, which includes preparing key documents such as the company’s deed of establishment, a Tax Identification Number (NPWP), and a letter of approval from the Ministry of Law and Human Rights (Kemenkumham).
These permits ensure the business complies with Indonesian regulations and is identified as a legal entity.
Prepare supporting documents
In addition to business permits, investors must prepare supporting documents, such as a location permit, to confirm where the business will be based.
Environmental permits, including UKL/UPL, AMDAL, and SPPL, are necessary to ensure the business activities comply with environmental regulations, and a construction permit (IMB) is required for any building or infrastructure development.
Register online
To finalize the investment process, investors must access the website https://oss.go.id to complete the online registration through Indonesia’s Online Single Submission (OSS) system.
This digital platform streamlines registering businesses and obtaining necessary licenses, making it easier for investors to comply with Indonesian regulations worldwide.
Guide to Doing Business in Batam & Surabaya
Maximize the opportunity for the best business in Batam with InCorp
Batam presents opportunities for investors, particularly in sectors supported by its strategic location and government incentives. Whether you’re exploring the best business in Batam, InCorp can help streamline your investment process with its extensive experience in market entry, such as:
- Company registration: We handle all legal aspects of setting up your business in Batam, ensuring a hassle-free registration process.
- Business licensing: InCorp assists with obtaining the necessary permits and licenses, including those specific to Batam’s key industries.
Click the button below to easily overcome the complexities of starting and operating a business in Batam.
Fauzyah Fasya
Branch Manager – Batam Office at InCorp Indonesia
With 7 years of experience in business consultancy, Fauzyah Fasya brings expertise in managing clients from diverse backgrounds. She excels in delivering service information, fostering strong business relationships, driving brand strategy, evaluating product performance, and maximizing revenue through quality management system implementation and management auditing.
