On a balmy tropical island near Bali, workers finishing up their day at companies including Epson, Hyundai, Philips, Sanyo and Siemens drive home to picturesque cottages by the sea. When not on the job, they water-ski, sail, play golf, dine in seafood restaurants, dance in discos and socialize with their culturally diverse neighbors, many of whom have emigrated here to succeed in the flourishing business climate. They are less than 12 miles away — an easy half-hour ferry ride — from the cultural and commercial bounty of Singapore. For residents of the Indonesian island of Batam, it’s like living and working in paradise.

Thirty years ago, 160-square-mile Batam was merely one of approximately 17,000 islands making up the Indonesian archipelago. Only 6,000 people inhabited its coastal fishing villages, living in thatched dwellings built on stilts among coconut palms and brightly colored bougainvillea. In 1969, the state-owned oil company Pertamina, established to manage the country’s rich energy resources, selected Batam as its base for offshore exploration. Two years later, a presidential decree designated the island an industrial area, eventually creating a special free-trade zone, open for any kind of industry.

Recognizing the need to develop the island’s infrastructure and cut through the red tape of processing business proposals and licenses, in 1971 the government established the Batam Industrial Development Authority. Implementing a master plan that designates development areas for industry, trade, tourism, service and trans-shipment, the BIDA set up 17 industrial parks outfitted with complete working environments: readybuilt factories and offices, staff housing, hospital and health services, and management support. Laws were relaxed to enable foreigners to own houses and commercial property and to set up enterprises without requiring Indonesian partners.

Companies from around the world soon arrived to take advantage of Batam’s strategic location, abundant and cheap labor, and low costs. By 2004, 728 businesses from countries including Canada, China, Germany, Iran, Tunisia, the United States and the United Kingdom were operating on the island, with a total investment of more than $10 billion. That year alone, the BIDA facilitated 62 new projects. Almost 3,000 foreigners work on Batam. Japan is the second biggest investor after Singapore, with the United States coming in at No. 7.

The population has grown to 560,000, with a work force of 190,000. Eighteen percent are employed in construction, trading, agribusiness, and hotels and restaurants. The majority — nearly three-quarters — work in manufacturing, with a focus on electronics: printed circuit boards, computer components and parts, audio and video equipment and automotive parts. Light industry also produces leather goods, shoes, toys, and household and healthcare products. Heavier industry supplies the petroleum interests: oil and steel, as well as pipe exploration equipment and offshore jackets.

Infrastructure evolved to keep pace with the steady business growth. More than 600 miles of paved roads connect the business-oriented area of the island with shoreline resorts and beaches. There are three cargo ports, and more than 100 ferries a day link the four terminals on Batam to Singapore and Malaysia. Hang Nadim International Airport (BTH), whose 2.5-mile runway is the longest in Indonesia, offers eight daily flights to Jakarta and 50 flights a week to other Asian cities.

Rainwater from six reservoirs is treated to meet World Health Organization standards, and there is enough for double the current population. State-owned diesel generators supply electricity, and radio towers enable state-of-the-art telecommunication facilities all over the island. Cell phones are ubiquitous.

Springing up all over the landscape, particularly near the boomtowns of Batam Center and Nagoya, are brightly colored housing projects. Fancifully decorated with towers and turr ets, these provide modern apartments for the growing work force. Three hospitals cooperate with facilities in Singapore and offer up-to-date medical treatment, from pediatrics to geriatrics. There are churches, temples, mosques and a polytechnic university.

As it develops, the region has also been reconfiguring political and geographical lines. Joining with the nearby southern islands of Rempang and Gulang, Batam created the principality of Barelang, interconnected by a series of six picturesque bridges. In July 2004, for administrative efficiency, Batam was subdivided away from oil-and-gas-rich Riau Province to become the center of Indonesia’s new resource-endowed Riau Archipelago Province, located strategically in the international shipping route between the Indian and Pacific oceans.

Shops and restaurants cater to the island’s emerging sophisticated lifestyle. Crowded with shops, Carrefours and other malls sell silvery slippers, whimsical note cards, jogging shoes and flouncy gowns. Eclectic cuisine ranges from the Sundanese and Thai dishes at the Kelong Seafood Restaurant, to the black-pepper crab and coconut prawns caught and cooked at seaside Rezeki. Homesick expats can find solace at the Novotel’s Mexican Bar or downing pints with smoked kippers or steak-and-kidney pie at Lucy’s Oar House.

But tourism is one of the island’s next big hopes. With more than a million visitors a year, Batam is already Indonesia’s second tourist draw, after Bali. Sheltered by the nearby big island of Sumatra, Batam’s vacation facilities escaped harm from last year’s tsunami. Its 47 hotels, six golf courses, seaside health clubs, waterfront bars and restaurants draw scores of visitors, many of them daytrippers from Singapore. With rates at upscale resorts ranging from less than $100 for a weekday water-view room to about $300 for a weekend two-bedroom beachside villa, Batam is hoping these values will increasingly attract destination vacationers.

Visas

American citizens are required to have a visa to enter Indonesia. They also must carry a passport valid for at least six months from the date of their arrival in Indonesia, and an onward/return ticket. The U.S. Embassy cannot obtain entry permission for Americans who have been denied it. For complete information, contact:
The Embassy of the Republic of Indonesia
2020 Massachusetts Ave. N.W.
Washington, D.C. 20036
tel 202 775 5200
fax 202 775 5365
http://www.embassyofindonesia.org

More Information

Batam Industrial Development Authority
BIDA Building
Batam Center
Batam, Indonesia 29400
tel 62 778 462047
fax 62 778 462456

Office of Industry and Trade
The Embassy of the Republic of Indonesia
2020 Massachusetts Ave. N.W.
Washington, D.C. 20036
tel 202 775 5288
fax 202 775 5554
http://www.inatrade-usa.org