Batam as one of the main destinations for foreign investors provides many advantages, among others due to its quite strategic location which is only 20 km from Singapore and is relatively safe from natural disasters as it is located outside the ring of fire. Thus, it makes Batam less likely to experience earthquakes and tsunamis.
The Indonesian government has implemented a tax incentive program called “Tax Holiday” with the following requirements:
CONDITIONS FOR REGISTERING THE TAX HOLIDAY FACILITY
TAX HOLIDAY FACILITIES*
* After the tax holiday period ends, Taxpayers are given additional Corporate Income Tax reductions: 50% of the income tax payable over the next 2 years for a Rp 500 billion minimum investment and 25% of the income tax payable over the next 2 years for a minimum of Rp 100 billion – <Rp 500 billion investment.
The value of the product must be 40% local content
According to Minister of Trade Regulation No. 3 / M-DAG / PER / 8/2010, to obtain a Certificate of Origin (COO), the following documents must be submitted:
The minimum wage for workers is based on the decision of the Governor of the Riau Islands to set a minimum wage. As for 2020 as stated in the Decree of the Governor of the Riau Islands Number 1047 of 2019 dated 21 November 2019, the Minimum Wage is Rp. 4,130,279/month (approximately USD 297).
Batam currently focuses on 2 main industries, namely the manufacturing and service industries. Manufacturing industries including Electronics and Electrical; industrial machinery, construction, shipbuilding, and oil & gas equipment; ICT (Information and Communication Technology); semiconductors and other electronic equipment; motor vehicles and parts thereof. Service industries include tourism, healthcare, Maintenance Repair and Overhaul (MRO), offshore banking, Logistics, and Education.
To support ease of doing business in Batam and after successful implementation of i23j (3 hours investment licensing service policy, the Central Government through Government Regulation Number 24 of 2018 concerning Integrated Electronic Business Services and Presidential Regulation Number 91 of 2017 concerning Acceleration of Business Implementation) has launched a new policy called Online Single Submission on 9 July 2018 to further improve the licensing process. All applications can be submitted via www.oss.go.id.
Applicants must submit the following documents:
Subsequently, the applicant must meet with authorized notary to issue Deed of shareholders. Use the Identification Number from KTP / Passport and within 1 hour OSS System will issue NIB (Business Identification Number) which includes TDP (Company Registration Certificate), API (Import Identification Number), and Custom Access.
Since the free trade zone in Batam applies to the entire island, there should be no issue where you establish your company, the incentives offered may be applied.
Batam Indonesia Free Zone Authority has a Directorate called “Directorate of Goods Traffic and Investment” to provide more details about the investment process in the government. For information on the establishment of factories and the licensing process, we also have the Mall of Public Service located in the Sumatra Promotion Center building.
Central government also has the Online Single Submission program that allows investors to apply for the establishment of factories through the website www.oss.go.id.
The main employment issue is regarding the Annual Minimum Wage (UMK). To overcome this problem, we have formed a Tripartite organization consisting of the Government (Manower Office), Employers, and Laborers so that any problems can be resolved properly through negotiations.