Manufacturing Growth in Batam: A 2023 Investment Opportunity

In 2023, the manufacturing industry in Batam is expected to experience growth due to its strategic location, favorable business environment, and abundant resources. 

Despite the potential for a recession and increased global unpredictability in 2023, the Indonesian government is confident that the domestic manufacturing sector will continue to grow. 

The manufacturing sector includes at least two other industries, semiconductors and health, with promising futures.

Manufacturing Industry in Indonesia Would Continue to Thrive in 2023 

Based on the Making Indonesia 4.0 roadmap, the seven industries targeted for growth are the food and beverage, clothing and textiles, automotive, electronics, chemical, medical device, and pharmaceutical sectors.

These sectors are also ready to embrace the industrial 4.0 era based on development goals. Medical devices are highly demanded and would be an excellent place for entities to start or expand their business. 

For businesses looking for assistance with such matters, InCorp Indonesia (formerly Cekindo) has ample experience assisting in company registration and product registration processes. 

How Manufacturing is Driving Indonesia’s Economic Growth

The development of the manufacturing industry is critical because it will have a chain effect on Indonesia. The innovation will lead to the creation of formal jobs with a high-quality workforce and better salaries. 

In Indonesia, the informal sector, particularly the trade sector, remains the economy’s primary driver, hindering progress in enhancing the well-being of its people.

The government’s efforts to develop the manufacturing sector manifest Indonesia’s economic transformation. The Indonesian government attempts to build and provide added value to the manufacturing industry by downstream natural resources and substituting imports. 

Manufacturing Industry in Batam is Increasing

With a 4.07% growth from June to July 2022, Batam’s export activity totaled USD 1.2 billion. With industrial items accounting for 89.95% of all exports between January and July, the total value of exports was USD 8.3 billion. 

Singapore is number one in terms of export destination nations, accounting for 47.7% of all exports, followed by the US (19.2%), China (4.7%), Australia (2.5%), Germany (2.3%), and China (4.7%). 

There was a rise in imports along with the rising export value. A total of USD 7.3 billion worth of importance were made into Batam from January to July 2022, with the value of those imports registered at USD 1.1 billion in July.

Batam Business Entity (BP Batam) is optimistic despite the threat of a global recession thanks to ongoing infrastructure development and the issuance of policies encouraging investment.

As a result, many foreign businesses are investing in Batam this year, particularly those involved in the digital industry and the Internet of Things (IoT), as well as existing businesses that have committed to growing. 

Due to a 19.64% decrease in imports of goods other than oil and gas, the import value in February was USD 16.84 million. 

The manufacturing industry’s products, the most prominent imported commodity with an import value of USD 797.22 million and a share of 96.98%, were deemed the root cause. 

The total value of imports in Batam climbed by 14.83% compared to the previous year’s time.

Read more: 8 Biggest Industrial Parks to Start Business in Batam

Why You Should Invest in Batam

Batam benefits from the Generalized System of Preferences (GSP) for the US market. It is also liable for the ASEAN-China Free Trade Area (ACFTA) for the Chinese market. 

In addition, Batam is accessible to non-FTA/CEPA (Comprehensive Economic Partnership Agreement) nations that support free trade and special economic zones.

1. High Economic Growth 

In the first half of 2022, Batam’s investment value reached IDR 6.1 trillion. With this sum, Batam’s Foreign Direct Investment (FDI) made up the most significant percentage of the realization of FDI investment in the Riau Islands, totaling IDR 6.4 trillion, or 79.16%.

With this increase in investment, Batam’s economic growth rate can attain the desired 7% level in 2022. As a result, Batam’s economy will grow by 4.75% in 2021 compared to a -2% decrease in 2020. 

2. Free-Trade Zone 

Its strategic location on the Malacca Strait’s international shipping lanes makes Batam appealing to foreign investors and keeps it overgrowing. 

The government has long acknowledged Batam’s advantageous location in the Malacca Straits, proximity to Singapore, and proximity to other countries such as China.

3. Massive Infrastructure Development in 2023

Infrastructure development is one of the government’s policy focuses in 2023. In that, the state budget allocation for infrastructure development remains noticeably prominent. 

The aim is to complete ongoing projects and optimize existing infrastructures through maintenance and rehabilitation. 

Why Batam is A Haven for Foreign Investment

The main conclusion from this reading is the benefits of investing in Batam. Batam is equipped with various elements supporting it to become an ideal investment zone. 

Aside from regions, the Indonesian government is also focused on particular sectors – such as the manufacturing sector. Therefore, businesses should aim to reap the benefits of the above ambits to maximize profits.