National strategic project: New attraction for investment in Riau Islands
This article has been translated by PwC Indonesia as part of our Indonesia Infrastructure News Service. PwC Indonesia has not checked the accuracy of, and accepts no responsibility for the content.
Bisnis Indonesia - Proyek strategis nasional: Pemikat baru investasi Kepri
12 November 2024
National and global businesses now have a new opportunity to invest in Riau Islands following the activation of the business licence for Tanjung Sauh Industrial Estate. This area is expected to attract investments of up to nearly Rp200 trillion.
This information was disclosed by Batam City Regional Secretary Jefridin, who announced that the industrial estate business licence (IUKI) for Tanjung Sauh Industrial Estate has been issued.
He added that Tanjung Sauh Industrial Estate is a national strategic project (PSN), with most of the land designated as a special economic zone (SEZ).
He stated that the PSN covers an area of 840.67 hectares, comprising 703.8 hectares of land and 136.87 hectares of sea.
“Approximately 59.7% of the area has been designated as an SEZ. Tanjung Sauh [Industrial Estate] is designed to support business activities in the production, processing, logistics, and distribution sectors,” he said in Batam on Monday (11/11).
He also mentioned that Tanjung Sauh Industrial Estate is the site for the development of both a coal-fired power plant (PLTU) and a solar power plant (PLTS).
“A PLTU with a capacity of 4x100 MW and a PLTS are planned for construction in 2025 to meet the area's energy needs. These projects are expected to create jobs for 366,087 workers by 2053,” he explained.
The PSN, which is also an SEZ, Tanjung Sauh Industrial Estate, is situated on an island of the same name. It spans 840.67 hectares. The SEZ, initiated by PT Batam Raya Sukses Perkasa, is expected to attract investments of up to Rp199.6 trillion.
“The development of Tanjung Sauh Industrial Estate is anticipated to proceed smoothly and positively impact economic growth in Batam and the surrounding areas,” he stated.
According to Bisnis' records, one of Singapore's leading companies, Sembcorp Industries, will develop two low-carbon industrial estates in Batam.
They are partnering with a major developer in Batam, Panbil Group. The projects will be divided into two parts, with one section located in the Tanjung Sauh SEZ.
Both companies have signed a memorandum of understanding (MoU) on 1 August 2024.
Sembcorp is planning to invest through its subsidiary, Sembcorb Development.
Sembcorp Development CEO Lee Ark Boon stated that his company's track record is well-established, particularly in the areas of energy and integrated urban solutions.
“The low-carbon industrial estates will foster the development of a new generation in the business world that is eco-friendly and promotes the Singapore-Batam partnership model,” he said in early August.
Of the two areas to be developed in Batam, the first project is located in Tembesi.
“The industrial estate spans 100 hectares and will accommodate various industrial sectors, including electronics, electricity, precision engineering, and pharmaceuticals,” he stated.
The next industrial estate project that covers 500 hectares is located in Tanjung Sauh, one of the smallest islands in Batam that has been designated as an SEZ for various industries.
The SEZ is managed by Panbil Group.
In the Tanjung Sauh SEZ, this project is intended to serve small to medium-sized industries, as well as energy-intensive businesses, such as advanced manufacturing companies and data centres, utilising the latest energy and sustainable circular solutions.
Meanwhile, Panbil Group Chairperson Johannes Kennedy Aritonang stated that the cooperation to develop these low-carbon industrial estates would support the establishment of new industrial sectors.
Regarding the Tanjung Sauh SEZ, he added that Panbil Group's initial investment would amount to approximately Rp30 trillion to Rp35 trillion. Meanwhile, investments from other investors over the next 10-20 years is expected to cumulatively reach around Rp180 trillion to Rp190 trillion.
Kennedy revealed that, in the early stages, the investment amount would reach Rp10 trillion to construct the reservoir, port, road infrastructure, and other facilities.
The primary focus in the Tanjung Sauh SEZ is the development of the electronic component industry and the electronic assembly industry.
In addition, the Tanjung Sauh SEZ will feature a transshipment port capable of accommodating up to 5 million TEUs, positioning it as a logistics centre in the Malacca Strait area.
Furthermore, the Tanjung Sauh SEZ will serve as a centre for research and energy development, as well as a producer of alternative energy, renewable energy and primary energy. This is intended to meet the needs of industries and households in Batam and Bintan.
Legal umbrella
The establishment of the Tanjung Sauh SEZ is outlined in Government Regulation Number 24/2024, signed by the 7th President of Indonesia, Joko Widodo.
Tanjung Sauh Island will be traversed by Batam-Bintan Bridge, which is set to be constructed soon.
Batam Indonesian Employers Association (Apindo) Chairperson Rafki Rasyid also welcomed the establishment of the new SEZ. He believes that the creation of the new SEZ will positively impact workforce absorption.
“Additionally, he is focused on energy development, which marks a new beginning for investments in Batam. This development must adapt to global industrial trends,” he explained in early June.
He added that there were many new investments in the new and renewable energy (NRE) industry. He believes that, gradually, green energy will replace fossil fuels, making Batam an important pioneer in NRE development in western Indonesia.
“This is a positive indicator for Batam’s economy, signifying that investment is moving towards eco-friendliness,” he stated.
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