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Two Special Economic Zones Planned For Indonesian Island Batam

February 2019

Batam island plans to develop two special economic zones (SEZs), on top of its free trade zone (FTZ) status. The proposed zones may be approved as early as June this year, contingent on Indonesia’s election results in April. The two proposed enclaves under the SEZ are the Hang Nadim International Airport for logistics and the island’s upscale north-eastern Nongsa area for tourism. Potential investment, including those in the pipeline, could be as high as USD 60 billion.

The proposal comes as Batam is facing flat growth and declining investments. The island hopes to revive growth through additional fiscal incentives including exemption from value-added taxes, removal from Indonesia’s negative-investment list and income-tax holidays. The island is also looking to boost cooperation with neighboring countries, making Batam the main entry and exit point for goods into Indonesia.

Recently large companies, such as Taiwanese electronics Pegatron Corporation and Apple have also considered relocating their factories in the island as a consequence of the United States – China trade war.

Currently, Indonesia has twelve SEZs, four of which – North Sumatra, Banten, Central Sulawesi and Lombok – have started their commercial operations.

(Source: The Straits Times)