The Batam island in Riau Islands Province of Indonesia, known for its free trade zone area as part of the Sijori Growth Triangle, is located 20 km (12.5 miles) off Singapore's south coast. The 415 km² (160 miles²) island has a population of 713,960 in December 2006, most of whom are Malays (85%) and Chinese (14%). A few indigenous Orang Laut tribes also live on the island. In the 1970s, the island underwent a major transformation from a largely forested area into a major harbor and industrial zone. The population drastically grew from a few thousand in the 1960s into hundreds of thousands.Located close to Singapore and endowed with a much cheaper labour force, several Singaporean companies have established factories in Batam. The official language on the island is Indonesian, but due to the sizeable Chinese population, Chinese dialects like Teochew and Mandarin are somewhat widely spoken. Apart from industrial zones, the islands have several resorts and tourist destinations.
SEZ - Special Economic Zones
Since 2006, the Indonesian Islands of Batam, Bintan and Karimun as well as Singapore benefit from the new SEZ scheme introduced by Indonesia and Singapore. Under this rule there will be no tax paid for shipments between these islands. This was introduced to help the economy in this region.
FTZ - Free Trade Zone
Since 29 June 2007, Indonesian government gives full free trade zone status for Batam and enclave status for Bintan and Karimun. This is to address the issue of legal certainty for investors.
According to the plan, Batam will be transformed into shipyard, electronic, and mecatronic industrial development centers; Bintan into textile, footwear, and tourism industrial development centers; and Karimun into shipyard, metal, component, agricultural, and marine produce industrial development centers.
Located only 20km from Singapore and 25km from Johor in Malaysia, Batam is Indonesia's equivalent to China's SEZ's (Special Economic Zones) - a place where the nation's economic planners test new economic policies and ideas. The island is an industrial hub with electronics factories, a large and growing ship repair industry and an even larger oil service sector. Quite a few expats head there for work, and pubs and golf courses have sprung up to serve them.
Most tourists, on the other hand, come from nearby Singapore and are mostly interested in illegal casinos. Unless you have a particular interest in these, you're better off going elsewhere, such as Batam's more resort-y neighbor Bintan or the peacful capital city of the province Tanjung Pinang.