Offer promising investment opportunities

Offer promising investment opportunities

Batam is strategically located within an international
shipping route between the Indian Ocean and the Pacific Ocean. It
lies only 20 kilometers 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 kms. However, due to rapid
development and the demand for space, the Batam Industrial area
was extended in 1992 to include two other islands, Rempang and
Galang and the smaller surrounding islands. Hence, the area was
named: Batam-Rempang-Galang or Barelang. The total area thus
became 715 sq kms. All the main islands are linked by the Trans-
Barelang road, which includes six beautiful bridges.

Although it is considered an industrial area, Batam has been
developed to serve four main functions, namely: industry, trade,
tourism, and as a transshipment area. The whole area of Batam,
Rempang and Galang has been designated a bonded area. All
imported goods for production purposes, such as capital goods and
raw materials, are exempt from import tax.

Batam is built to be an export oriented industrial area, so as
not to compete with other industrial areas in Indonesia that
market their products within the country.

Proximity to Singapore is an advantage as investors do not
feel isolated in Batam. Batam has been developed to benefit from
the progress that has been achieved by its neighbor.

With a shortage of available land and high labor costs,
Singapore takes advantage of land availability and investment
cost competitiveness in Batam. A close relationship between the
two governments has encouraged good cooperation between private
sectors on both sides.

Why invest in Batam?

As of December 2001, Batam had accumulated approximately
US$8.8 billion in investment comprising $2.1 billion (24 percent)
in government investment and $6.7 billion (76 percent) in private
investment.

Government investment is in terms of infrastructure
development. Private investment comprises 49 percent or $3.3
billion domestic investment and 51 percent or $3.4 billion
foreign investment. More than 531 foreign companies are operating
in Batam while the number of local companies is nearly 9,700. In
the first semester this year, Batam gained investment from 47
additional foreign companies worth over $1 billion.

Industrial facilities are abundant. Investors can choose
whether to plug into a commercial ready-to-use factory building
with complete facilities or to acquire a lot to custom-build its
factory. Erecting a 1,000 sq meter factory building on a 2,000 sq
meter lot would cost only around $200,000, including the cost of
acquiring the land.

There are 14 industrial estates offering facilities ranging
from ready-to-build lot parcels to buildings with complete
facilities. Some industrial estates also offer a complete
package, which includes the processing of permits and licenses
from related authorities and the recruitment of workers. Housing
for workers in dormitories is also provided within the industrial
estate.

There are approximately 520,000 people living in Batam, coming
from all over the Indonesian archipelago with 165,000 people
employed in the formal sector, and 70,000 more in the informal
sector.

This labor force is becoming increasingly better skilled as
they have years of training and experience. This skilled labor
force can be sourced directly in Batam, without the need to
recruit workers from other regions, such as Java and Sumatra.
Half of the population in Batam are factory workers, making it a
very healthy dependency ratio.

An application for foreign investment is processed with a one-
stop policy in Batam and takes no 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 percent foreign ownership. The temporary resident visa
for foreigners working in Batam is easy to obtain from the local
immigration office. Foreign visitors to Batam will be given a
visa on arrival for most nationalities. Foreign nationals are
allowed to buy and own houses, including shop houses, whether or
not they work in Batam. So, Batam could become a second home for
foreigners.

All of these things reflect the commitment of the Indonesian
government to fully support the development of Batam. Private
sector involvement with strong support from the government are
among the ingredients for successful development.

Well-developed infrastructure

Besides its strategic location, space availability, labor
supply, and government support, Batam has the advantage of having
well-developed, modern infrastructure.

More than 1000 kms of paved roads and highways link all
centers of activity. These roads are continuously being improved
and widened to anticipate the rapid growth in traffic. Traffic
jams are nowhere to be seen even during peak periods. There are
seaports to serve cargo vessels and six passenger ferry terminals
around the island to minimize travel time to destinations with
more than 100 trips daily serving Singapore and Malaysia. The
biggest seaport in Kabil has a berthing capacity of 35,000 Dead
Weight Ton (DWT) 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-meter runway,
the longest in Indonesia, to serve wide body passenger and cargo
aircraft with eight flights daily to Jakarta, and 50 flights
weekly to other major cities in Indonesia. The terminal building
has a total floor area of 31,500 sq meters and will gradually be
expanded to 88,000 sq meters.

Telecommunication facilities are also of the highest standard
with state-of-the-art technology, of which only 75 percent of the
available capacity has been used. One does not feel isolated in
Batam since communication to all parts of the world is only a
button away. Electricity is supplied by PLN, the state-owned
electricity company, and additional power is also supplied by
private power plants.

Fresh water is abundant from six reservoirs built around the
island with the total capacity of 3,850 liters per second. The
supply of clean water is sufficient to support a population of
800,000 people and industry and conforms to the standards of the
World Health Organization. It currently runs at a capacity of
1,710 liters of clean water per second.