The Free Trade Zone, known as an FTZ, has been discussed among investors, businesses owners, the Indonesian government and the local community about the development of Batam local economical activities.
In mid-2006, the heads of State of the Republic of Indonesia and Singapore met in Batam, Nongsa and agreed on a number of cooperative efforts, including the framework for economic cooperation investments.
On January 19, 2009, the President of Indonesia officially declared the Batam-Bintan-Karimun as a free trade zone (FTZ). FTZ is a policy exempting facilities from some local customs rules, including the taxes and levies. In this area, trade is governed by a wide range of regulations. Investors can use this route to establish businesses in the region.
In December 2018, a meeting in the President of Indonesia office, Joko Widodo decided the Batam Indonesia Free Zone Authority (BIFZA) will be managed by the regional government to remove the dualism in Batam Island, Riau.
"President and Vice President decided to remove the dualism. So it must be only one and not two, to make the dualism disappear,” said Coordinating Minister for Economic Affairs, Darmin Nasution, after the meeting on Wednesday 12, 2018.
The president said, “We want Batam and its surroundings to have a strategic position that can be maximally developed, to appeal and be competitive as a special economic zone and be attractive for investors,”.
The development of the digital park was an implementation of the deal between President Joko Widodo and Singapore PM Lee Hsien Loong in 2017 to support the collaboration between private sector players from both countries to develop the digital economy sector in Batam. The Nongsa Digital Park is the initial phase of the development of digital parks across the country.
He added, the BIFZA dissolution is expected to be implemented next year. As for now, the government is processing some records, such as assets, legal documents, data, and others.
The agency liquidation is also in accordance with a government plan to change Batam from a free trade zone (FTZ) to special economic zone (SEZ). To be successful, the SEZ should provide superb logistical efficiency, including fast flows of goods, competitive labour and simplified documentation process.