- Batam is strategically located within an international shipping route between the Indian and the Pacific Ocean. It lies only 20 km to the southeast of Singapore which has one of the busiest seaport in the wolrd.
- The whole area of Batam is declared as bonded area. Batam is build to be an export oriented and prime industrial estate in Asia Pacific.
Facilities offered to foreign investment in Batam are as follows:
- Allowance to establish 100% foreign ownership
- Streamlined procedure for foreign investment
- Foreign investment license for 30 years and extendable
- Simple immigration procedure for expatriates
- Land lease up to 80 years and extendable
- Easy import and export procedure
Competitiveness of Batam can be obtained through some incentives offered:
- No import/export duties on machine, equipment, spare parts, raw material. The whole island is dutyfree with no import/export tax on any items.
- No VAT for all processing industry for export purposes. Unlike other parts of Indonesia, Batam is a bonded zone, thus, does not apply VAT on processing products nor consumption goods and neither does sales tax on luxury goods. If the manufactured products are sold in other non-bonded parts of Indonesia, they will then be applied 10% of VAT.
- GSP (Generalized System of Preferences) facility with 28 donor countries; also the Common Effective Preferential Tariff for ASEAN countries.
- Investment Allowance with reduction of income tax for certain industries with various incentives in reduction in calculation of net income, accelerated depreciation, compensation for losses, and lower tax rate considering Double Taxation Avoidance Agreement.
- Double Taxation Avoidance Agreement with 51 countries.
- Competitive cost of investment due to competitive tariffs on land lease, labour cost, utilities, and other operating costs.