SIG’s Field Visit to Batam and Bintan: Ideal Manufacturing Hubs Behind Singapore
SIG’s Field Visit to Batam and Bintan: Ideal Manufacturing Hubs Behind Singapore
Sep 05, 2024
In recent years, Indonesia’s Batam and Bintan islands, located near Singapore, have emerged as popular investment destinations for international companies, particularly those seeking a strategic base to expand into global markets via Singapore’s port. At the start of 2024, SIG Tax & Accounting, in collaboration with the Singapore branch of the China-Singapore Group, conducted an in-depth field visit to the industrial zones of Batam and Bintan, exploring the islands’ industrial potential and unique advantages within the global supply chain.
Established Industrial Development
Both Batam and Bintan offer well-developed infrastructure with self-sufficient water and electricity supplies, combined with relatively low labor costs, making them ideal locations for companies looking to establish manufacturing facilities and lower operational expenses. Batam’s industrial area has over 30 years of development history, boasting a mature and efficient operational model that has attracted many multinational companies. Meanwhile, Bintan presents new opportunities for factory establishment, positioning itself as a rising hub for manufacturing and logistics through continuous infrastructure upgrades.
Key Advantages of the Two Industrial Zones
Free Trade Zones
Both Batam and Bintan benefit from free trade zone policies, allowing for the duty-free import of raw materials and equipment, significantly reducing costs for export-oriented industries.
Exporting industries also enjoy VAT exemptions, providing a competitive price advantage in global markets.
Favorable Investment Environment
100% foreign ownership is allowed in both industrial zones, providing international companies with extensive investment opportunities and full control over their operations.
Agreements to avoid double taxation have been signed with 59 countries, including Singapore, Japan, the US, and major European nations, alleviating tax burdens for multinational companies and boosting investment confidence.
Additionally, Indonesian products that qualify under the Generalized System of Preferences (GSP) benefit from tariff exemptions, facilitating easier access to member country markets and enhancing the competitiveness of Indonesian-made goods.
Strong Government Support
The Singapore government actively supports businesses through the “Singapore+1” strategy, offering incentives and subsidies to companies looking to expand operations through Singapore to surrounding regions like Batam and Bintan.
Bilateral investment agreements ensure protection and support for investments from both Indonesia and Singapore, providing a robust legal framework for long-term business development.
Coexistence of Industry and Leisure
In addition to their industrial advantages, Batam and Bintan are known for their rich entertainment and tourism resources. For example, Bintan Island boasts world-class beach resorts and eco-tourism attractions such as wildlife sanctuaries, offering a diverse development model beyond industrialization. This combination of industrial and leisure opportunities creates a favorable environment not only for businesses but also for employees, enhancing the region’s appeal as a long-term investment destination.
Complementary Industries and Ecology
Strategically located in the Strait of Malacca, Batam and Bintan form a complementary relationship with Singapore’s industrial landscape. While Singapore excels in finance and high-tech industries, Batam and Bintan complement these strengths with their focus on manufacturing and logistics, together forming a powerful regional economic chain. Additionally, these islands are often referred to as the “backyard of Singapore,” providing a nearby getaway for Singapore’s urban population with their natural beauty and tourism offerings.
After years of cooperative development, Batam and Bintan have become essential manufacturing hubs behind Singapore. Whether you are looking for investment opportunities or exploring new industries within the global supply chain, these islands offer exciting potential.
SIG Tax & Accounting is ready to provide more detailed information and advisory services for companies interested in exploring investment opportunities in Batam and Bintan. If you have any questions, please feel free to contact us for further consultation.