Since the establishment of Batam as a Free Trade Zone, FTZ, in accordance with PP (Government Regulation) No. 44 year 2007, the Central Government has provided 4 advantages listed in the Law on Free Ports and Free Trade, including: free from Value Added Tax (PPN), Value Added Tax on Luxury Goods (PPn-BM), import and foreign export duties.
Meanwhile, the Special Economic Zone, SEZ, is established on PP (Government Regulations) No. 96/2015, by providing 14 ease on investment, including: investment allowance, accelerated amortization, dividend tax, longer loss compensation, tax holidays, Article 22 Import income tax free, import VAT free, domestic purchase VAT free, VAT and / or Luxury Tax exemption facilities, delivery of goods to other facility recipients not charged, VAT refund to individuals holding foreign passports, suspension of import duties, import duties free and excise duty free.
Nongsa Digital Park has been assigned as the SEZ area in Batam which focuses on digital industry and tourism, while Batam Aero Technic focuses on aircraft maintenance, repair, overhaul (MRO) industry. Also, in the near future, there will be 2 other SEZ developments, Hang Nadim Aerocity and Sekupang Health Sector.
With Batam as both free trade area and special economic zone, hopefully Batam will become more competitive in Southeast Asia in attracting foreign investment.