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International Guarantee Agreement Foreign investment in Indonesia has been guaranteed through International Guarantee Agreement with 52 countries in order to cover compensation in case of nationalization or expropriation, damages or losses caused by incidents of war, revolution or insurrection, and payments for any approved remittance pursuant to the investment in case of non-convertibility of the currency of the host country.

Batam Industrial Development Authority (BIFZA) has a one-stop policy for investment procedures, permitting companies to do all their business dealings through the one office. BIFZA gives their assurance that all applications will take not more than 20 working days to attain approval.

The general procedure for permit acquisitions is as follows:

  • Submit application to BIFZA
  • BIFZA processes request
  • Approval permits are given to investor

Application form for investment to be completed by prospective investor explains their business field, total amount of investment, land area and manpower required. Details of procedure, step-by-step process, and application form of foreign investment approval and land allocation is in our other publication “Latest Update: Foreign Investment Policy in Batam”. For companies operating through the industrial parks, the land allocation will not be needed, since it would already be part of the package offered.

Procedure for Land Acquisition and Development

Land allocation can be obtained from BIFZA and the applicant needs to supply the following materials for approval:

  • Land application
  • Proposal for land use

When the application is approved, BIFZA will supply the applicant with the following documents:

  • Principal permit
  • Invoice for land lease (See Appendix A for land lease details)
  • Land allocation documents (land lease agreement and land allocation decree)
  • Land allocation permit

Labour

Wages of unskilled workers are regulated by the government and reviewed annually, with variations in each region or district. Standard of minimum wage in Batam is reviewed by a tripartite meeting, consisting of related government offices, private sectors represented by the Batam Chamber of Commerce & Industry (KADIN), Association of Entrepreneurs (APINDO), as well as labour unions.

Effective from January 1, 2003, the minimum wage is stipulated by Decree of Riau Governor No. KPTS 553.d/XI/2002 and No. KPTS.553.e/XI/2002 dated 23 November 2002, which establishes the following requirements:

  • Rp. 555,000.- general minimum wage of Batam
  • Rp. 595,000.- minimum wage for tourism industry
  • Rp. 627,000.- minimum wage for heavy industry

As a general indicator, the wages structure in Batam in 2003 can be described as follows:

Classification Rp/Month
Unskilled Labour 555,000 – 650,000
Skilled Labour 700,000 – 1,200,000
Clerk and Typist 700,000 – 1,200,000
Factory Supervisor 1,200,000 – 3,000,000
Senior English Speaking Secretary 1,500,000 – 2,500,000
Factory Manager 6,000,000 – 12,000,000
Financial Controller 3,500,000 – 10,000,000
Senior Accountant, Marketing Manager,
Personnel Manager or Production Manager.
6,000,000 – 15,000,000

Additional to the basic salary, the company is obliged to provide payments for :

  • ncome tax
  • Insurance (retirement, work-related accident, health, and life insurance)
  • Medical expenses not covered by the health insurance
  • An annual Hari Raya bonus of at least 1 (one) month basic salary

There are other benefits that are commonly provided by companies in Batam:

  • Housing allowance
  • Transport and meal allowances
  • Monthly bonus based on productivity
  • Attendance allowance

Basic working hours are not more than 40 hours per week.

  • 8 hours a day if working 5 days a week (Monday to Friday)
  • 7 hours a day if working 6 days a week
    (Monday to Friday 7 hours and 5 hours on Saturday)
  • For office work, working 5 (five) days a week, from Monday to Friday,
    is becoming more popular.

Rest periods due to employees are as follows:

1 day off within a week if working 7 hours a day (6 workdays/week)
2 days off within a week if working 8 hours a day (5 workdays/week)

Company is obliged to register and include all employees in the retirement, work-related accident, and life insurance with JAMSOSTEK. For health insurance, company may choose to participate in JAMSOSTEK or other insurance companies with at least the same privileges. Some companies have cooperations with hospitals or health clinics for all employees’ medical treatment.

Under labour regulations, overtime is payable as follows:

Classification Rp/Month
Classification Rp/Month Rp/Month
Monday to Saturday 1.5 2
Sunday and Public Holidays 2 3 4

Overtime is paid by the multiplication of hourly rate, based on the monthly basic salary divided by 173 average working hours/month.

The Indonesian Labour Federation (SPSI) was established in 1973. There are labour unions representing 21 different industrial sectors under the auspices of SPSI. Membership in SPSI is not compulsory.

Investment Statistics

Total Investment

In US $ Up to JUNE 2015

In US $ Up to JUNE 2015

Private Investment

In US $ Up to JUNE 2015

Government Investment

In Million US $ Up to JUNE 2015

Domestic Private Investment

In Million US $ Up to JUNE 2015

Foreign Private Investment

In Million US $ Up to JUNE 2015

Private Investment Growth (Domestic & Foreign)

In Million US $ Up to JUNE 2015

Private Investment by Type of Business

In Percentage Up to JUNE 2014

(Sourced from http://www.bpbatam.go.id/eng/Industry_economy/invest_statis.jsp)

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