The global economic landscape in recent years has encouraged many Southeast Asian countries to strengthen their strategic zones as emerging investment hubs. 

Indonesia has responded to this dynamic with a major policy move through the issuance of Government Regulation Number 47 of 2025, which revises the framework of the Free Trade Zone (FTZ) and Free Port of Batam.

This regulation represents more than an administrative update. It marks a comprehensive transformation of Batam’s economic map. While FTZ Batam previously covered only eight main islands, its scope has now expanded to twenty two islands.

This expansion opens significantly broader investment space, creating new opportunities across logistics, manufacturing, tourism, digital economy, and maritime industries. 

The government has clearly positioned Batam as a new center of gravity for high value economic activities in the regional landscape.

The Evolution of FTZ Batam Area Coverage from 8 to 22 Islands

Since its initial establishment, FTZ Batam has included Batam Island, Tonton Island, Setokok Island, Nipah Island, Rempang Island, Galang Island, Galang Baru Island, and Janda Berhias Island.

Batam Island rapidly developed as a manufacturing and international trade center, while Rempang and Galang served as supporting industrial and residential areas.

This model successfully attracted foreign investment for many years. However, as industrial and logistics sectors continued to grow, land availability on Batam Island gradually became limited. 

The demand for green industrial estates, deep sea ports, and modern tourism zones pushed the government to seek long term solutions.

Through Government Regulation Number 47 of 2025, FTZ Batam area coverage was significantly expanded. An additional fourteen islands were officially incorporated into the FTZ regime, bringing the total to twenty two islands.

This move allows the integration of surrounding small islands into a planned and connected economic ecosystem. 

These new areas immediately enjoy FTZ fiscal incentives and streamlined licensing processes. For investors, this expansion offers more flexible location choices and broader business development potential.

The Complete List of 22 FTZ Batam Islands and Their Strategic Potential

Following the enactment of Government Regulation Number 47 of 2025, FTZ Batam now includes:

  • Batam Island as the core hub for manufacturing, financial services, and digital economy activities. 
  • Tonton Island and Setokok Island function as industrial buffer zones with connectivity through the Barelang Bridge. 
  • Nipah Island remains strategically important for maritime services and ship fuel bunkering.
  • Rempang Island is being developed as an integrated eco city and a center for renewable energy and glass manufacturing industries.
  • Galang Island and Galang Baru Island support heavy industries, food processing, and natural resource based sectors. 
  • Janda Berhias Island serves as a hub for shipbuilding and oil and gas industries.
  • Tanjungsauh Island is projected as a deep sea container port and international logistics hub.
  • Nirup Island is prepared as a premium tourism destination with exclusive marina facilities. 
  • Ngenang Island adopts a community based creative industry and ecotourism concept.
  • Kapal Besar, Kapal Kecil, Bokor, Dangas, and Buntut Meriam Island are focused on maritime operations, transshipment, and logistics services. 
  • Catur Island, Layang Island, and Subar Island are directed toward environmental conservation and sustainable tourism.

This diversification highlights that FTZ Batam is no longer solely oriented toward mass electronics manufacturing but is evolving into a multi sector economic zone with global competitiveness.

Strategic Zoning and Development Planning Areas

Along with the territorial expansion, the Batam Development Authority (Badan Pengusahaan Batam or BP Batam) has introduced the concept of Development Planning Areas (Wilayah Penataan Pengembangan or WPP) as priority zoning guidelines.

Several key areas have been designated as new economic growth engines. 

  • The Teluk Tering Epicenter is being developed as a modern business district and world class waterfront area.
  • New Nagoya is positioned as an integrated commercial and entertainment hub. 
  • Hang Nadim Aerocity is planned as an aviation based industrial zone supporting air logistics and high technology manufacturing connected directly to the international airport.

These zoning plans provide investors with clear long term development direction and assist in selecting strategic investment locations aligned with their business objectives.

FTZ Batam Incentives Across the Expanded 22 Islands

All twenty two FTZ Batam islands now enjoy exemptions from import duties, value added tax (Pajak Pertambahan Nilai or PPN), luxury goods sales tax (Pajak Penjualan atas Barang Mewah or PPnBM), and certain excise reductions.

These incentives directly lower production and logistics costs, enhancing export competitiveness. 

For international manufacturing and logistics companies, cost efficiency remains a key factor in relocation and expansion decisions.

Supporting regulations further strengthen integrated business licensing through FTZ authorities. In addition, Batam Development Authority Regulation Number 6 of 2025 introduces more transparent land allocation mechanisms, including competitive selection processes for premium land and mandatory investment bank guarantees.

These policies ensure FTZ land is used productively rather than controlled by passive speculators. Serious investors gain long term certainty, while the region benefits from accelerated economic activity.

Batam Economic Targets from 2025 to 2029

The transformation of FTZ Batam is accompanied by ambitious targets outlined in the Batam Development Authority Strategic Plan 2025 to 2029.

The government aims to achieve cumulative investment realization exceeding IDR 300 trillion, with Batam’s economic growth projected to reach 10 percent by 2029.

Priority sectors driving this growth include:

  • International logistics hubs
  • High value added manufacturing industries
  • Digital economy development
  • Aerospace services through aircraft maintenance facilities
  • International trade activities
  • Integrated tourism sectors

The development of Nongsa Digital Park strengthens Batam’s role as a digital economy bridge between Indonesia and Singapore. Meanwhile, the expansion of Hang Nadim Airport creates major opportunities in air logistics and aviation industries.

Social and Environmental Challenges

Despite the significant opportunities, the expansion of FTZ Batam also presents complex challenges. 

The inclusion of small islands inhabited by fishing communities requires a more inclusive development approach.

Land disputes, access to traditional fishing areas, and potential environmental impacts from reclamation projects have become key concerns. 

The government and BP Batam are expected to enhance transparency in strategic environmental assessments and actively involve local communities in development processes.

The long term success of FTZ Batam will depend on balancing economic growth with social sustainability and environmental protection.

The Role of XPND in Supporting Investors in Batam

The expansion of FTZ Batam area coverage to twenty two islands creates significant investment opportunities while also introducing greater regulatory and operational complexity. 

Establishing companies, ensuring regulatory compliance, navigating risk based licensing systems, and managing legal structures require professional expertise.

This is where XPND plays a crucial role. XPND serves as a strategic partner assisting both foreign and domestic investors in establishing companies in Batam legally, efficiently, and in line with the latest FTZ regulatory framework.

With in depth understanding of FTZ policies, licensing reforms, and land governance in Batam, XPND ensures that investment processes run smoothly from planning to full operation. 

This professional support allows investors to focus on business growth without being burdened by administrative complexities.

As Batam continues its transformation into a globally competitive multi sector economic zone, the presence of reliable professional partners becomes essential to fully capture the opportunities created by the FTZ expansion.