Batam, an island that is located in south of Singapore and is a part of the Riau Islands, has been inaugurated as a Free Trade Zone (FTZ) since 1973. FTZ is an area within the territorial jurisdiction of the Republic of Indonesia that is separated from the customs area so that it is free from the imposition of import duties, value added tax, sales tax on luxury goods, and excise so that companies in the area can operate without tariff limits or import quotas. Thus, from these incentives, investors from various countries are interested in investing in FTZ Batam. It was noted that in 2023, the increase in foreign investors in FTZ Batam reached a total of Rp500 trillion because FTZ Batam became one of the destinations for foreign investment in Indonesia.
Benefits of FTZ
Batam FTZ itself has a number of benefits, including increasing the efficiency of international trade, expanding business and product competitiveness, strengthening business networks, utilizing infrastructure and human resources, modern labor, creating favorable conditions for licensing processes, and increasing tourism potential.
Challenges of FTZ
However, FTZ Batam also faces a number of challenges, including facing intense competition with other free trade zones in the ASEAN region, maintaining the balance of national and regional interests, and resolving social and environmental issues.
With this, FTZ Batam must continue to innovate and adapting to global and regional developments, while still paying attention to aspects of sustainable development. FTZ Batam should also strengthen cooperation with central, local and private sectors as well as neighboring countries to maximize its potential and overcome existing obstacles. Batam FTZ also has a great opportunity to become a special economic zone that can contribute positively to Indonesia's international trade and development.
Batam FTZ is an example of Indonesia's efforts to integrate with other countries in the world. By utilizing FTZ Batam, Indonesia can improve the welfare of its people, strengthen state sovereignty, and strengthen friendly relations with other countries. Batam FTZ itself can also be a model for other regions in Indonesia that want to develop their economic potential. Batam FTZ shows that Indonesia is an open, dynamic and progressive country.
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