1. INDONESIAN GOVERNMENT’S SUPPORT
ON RIAU ISLANDS PROVINCE AND
BATAM, BINTAN, KARIMUN (BBK)
FREE TRADE ZONE
INDONESIAN MINISTRY OF
FINANCE
REGIONAL TREASURY OFFICE FOR RIAU
ISLANDS PROVINCE
2. BATAM, BINTAN, KARIMUN (BBK) FREE TRADE ZONE OUTLOOK
INDONESIAN MINISTRY OF
FINANCE
REGIONAL TREASURY OFFICE FOR RIAU
ISLANDS PROVINCE
BBK is a main part of Riau Islands Province which situated in proximity
to Singapore and Malaysia (Home to the world’s busiest and 6th
busiest transshipment port respectively)
Part of the Sijori (Singapore-Johor-Riau) Growth Triangle, undertaken
since 1989 and to which Singapore’s growing limitation of land and
affordable labours will be poured as investments to it’s vicinity.
9.48
6.05
5.69
5.29
3.73 3.55
2.85 2.59
0
1
2
3
4
5
6
7
8
9
10
Singapore Malaysia Batam Thailand Phillipines Vietnam India Indonesia
Best
Source: Processed Data from Political and Economic Risk Consultancy Report
Physical Infrastructures
The development of industry-sustaining infrastructures is
highly supported by the government as depicted above
where the score of Batam’s Physical Infrastructure is well
above the average of Indonesia
A range of tax and custom incentives is increasingly lucrative for
investors after the legislation of BBK as Free Trade Zones in 2009
3. CENTRAL GOVERNMENT BUDGET ALLOCATIONS ON RIAU ISLANDS PROVINCE
INDONESIAN MINISTRY OF
FINANCE
REGIONAL TREASURY OFFICE FOR RIAU
ISLANDS PROVINCE
Source: processed data from DG of Treasury
*Conversion at spot market rate as of 11 November 2015 (1 USD equals to 13,607 IDR)
No Sector
ALLOCATIONS
2014
2015
Increase/(Decrease)
Initial Amendment
1 Public Service 1.3 trillion IDR / 95 million USD 1 trillion IDR / 73.1 million USD 1.1 trillion IDR / 81.1 million USD (190 billion IDR) / (14 million USD)
2 Defense 248 billion IDR / 18 million USD 336.4 billion IDR / 24.7 million USD 336.4 billion IDR / 24.7 million USD 88.3 billion IDR / 6.5 million USD
3 Public Order and
Security
290 billion IDR / 21.3 million USD 409.7 billion IDR / 30.1 million USD 417.4 billion IDR / 30.7 million USD 127.6 billion IDR / 9.4 million USD
4 Economics 2.06 trillion IDR / 151 million USD 2.47 trillion IDR / 181.3 million USD 2.7 trillion IDR / 198.7 million USD 647.1 billion IDR / 47.5 million USD
5 Environment 87 billion IDR / 6.4 million USD 96 billion IDR / 7 million USD 82.65 billion IDR / 6 million USD (4.2 billion IDR) / (311 thousand USD)
6 Housing and Public
Facilities
167 billion IDR / 12.2 million USD 159 billion IDR / 11.7 million USD 159 billion IDR / 11.7 million USD (8 billion IDR) / (588 thousand USD)
7 Health 114.3 billion IDR / 8.4 million USD 101.2 billion IDR / 7.4 million USD 109 billion IDR / 8 million USD (4.4 billion IDR) / (323 thousand USD)
8 Tourism and
Culture
500 million IDR / 37 thousand USD 4 billion IDR / 300 thousand USD 4 billion IDR / 300 thousand USD 3.6 billion IDR / 263 thousand USD
9 Religion 31 billion IDR / 2.3 million USD 40 billion IDR / 2.937 million USD 52.59 billion IDR / 3.8 million USD 21.7 billion IDR / 1.6 million USD
10 Education 354 billion IDR / 26 million USD 377 billion IDR / 27.7 million USD 377.6 billion IDR / 27.8 million USD 23.6 billion IDR / 1.7 million USD
11 Social Security 12 billion IDr / 881 thousand USD 13 billion IDR / 958 thousand USD 12.7 billion IDR / 935 thousand USD 734 million IDR / 54 thousand USD
T O T A L 4.65 trillion IDR / 342 million USD 5 trillion IDR / 367.4 million USD 5.4 trillion IDR / 395.6 million USD 729 billion IDR / 53.6 million USD
4. GOVERNMENT’S COMMITMENT ON INFRASTRUCTURE DEVELOPMENT IN RIAU ISLANDS
INDONESIAN MINISTRY OF
FINANCE
REGIONAL TREASURY OFFICE FOR RIAU
ISLANDS PROVINCE
Year
Central Government Spending Allocation on Infrastructures
Public Service
Buildings
Roads and Bridges Airports Ports Utilities Total
2010
108.6 billion IDR /
8 million USD
102 billion IDR /
7.5 million USD
16.9 billion IDR /
1.2 million USD
94.7 billion IDR /
7 million USD
88.5 billion IDR /
6.5 million USD
410.7 billion IDR /
30.2 million USD
2011
75 billion IDR /
5.5 million USD
196 billion IDR /
14.4 million USD
21.3 billion IDR /
1.5 million USD
82 billion IDR /
6 million USD
125.8 billion IDR /
9.2 million USD
500 billion IDR /
36.7 million USD
2012
150 billion IDR /
11 million USD
264 billion IDR /
19.4 million USD
82.6 billion IDR /
6 million USD
138.6 billion IDR /
10.2 million USD
254 billion IDR /
18.7 million USD
889 billion IDR /
65.3 million USD
2013
123 billion IDR /
9 million USD
367.4 billion IDR /
27 million USD
51.5 billion IDR /
3.8 million USD
239 billion IDR /
17.6 million USD
285 billion IDR /
21 million USD
1.1 trillion IDR /
78.3 million USD
2014
224.5 billion IDR /
16.5 million USD
385.7 billion IDR /
28.3 million USD
127 billion IDR /
9.3 million USD
263 billion IDR /
19.3 million USD
290 billion IDR /
21.3 million USD
1.3 trillion IDR /
94.8 million USD
2015
315.5 billion IDR /
23.2 million USD
489 billion IDR /
36 million USD
312.2 billion IDR /
23 million USD
547.1 billion IDR /
40.2 million USD
449 billion IDR /
33 million USD
2.1 trillion IDR /
155.3 million USD
Average Annual
Growth
34.79% 39.58% 113.57% 49.21% 42.59% 40.86%
Central Government spending allocation on infrastructures development in BBK and it’s surrounding areas has been growing remarkably since
2010 especially on 2015 as a result of Government’s commitment on reallocating unproductive spending into infrastructures
Source: processed data from DG of Treasury
*Conversion at spot market rate as of 11 November 2015 (1 USD equals to 13,607 IDR)
5. GOVERNMENT’S COMMITMENT ON INFRASTRUCTURE DEVELOPMENT IN RIAU ISLANDS
INDONESIAN MINISTRY OF
FINANCE
REGIONAL TREASURY OFFICE FOR RIAU
ISLANDS PROVINCE
0
100
200
300
400
500
600
2010 2011 2012 2013 2014 2015
InbillionsIDR
Source: processed data from DG of Treasury
Government Spending Allocation on Infrastructures
PSB
Roads
Airports
Ports
Utilities
34,79%
39,58%
113,57%
49,21%
42,59% 40,86%
0%
20%
40%
60%
80%
100%
120%
PSB Roads Airports Ports Utilities Overall
Source: processed data from DG of Treasury
Average Annual Growth of Government Spending Allocations
6. PUBLIC SERVICE BUILDINGS DEVELOPMENT
INDONESIAN MINISTRY OF
FINANCE
REGIONAL TREASURY OFFICE FOR RIAU
ISLANDS PROVINCE
108,6
75
150
123
224,5
315,5
0
50
100
150
200
250
300
350
2010 2011 2012 2013 2014 2015
InbillionIDR
Source: processed data from DG of Treasury
CG Budget Allocations
Indonesian Central Government has been committed to fulfill the
needs of public service, public safety and public order in BBK and
it’s surrounding areas, hence maintaining the business-friendly
environment at place. Investment by Central Government on Public
Service Buildings has been growing at an annual rate of 34.79% on
average since 2010.
7. ROADS AND BRIDGES DEVELOPMENT
INDONESIAN MINISTRY OF
FINANCE
REGIONAL TREASURY OFFICE FOR RIAU
ISLANDS PROVINCE
102
196
264
367.4 385.7
489
0
100
200
300
400
500
600
2010 2011 2012 2013 2014 2015
InbillionIDR
Source: processed data from DG of Treasury
CG Budget Allocations
Indonesian Central Government has been committed to keep improving
interconnection between Industrial, Residential, Commercial and
Export/Import shipment areas around BBK to minimize logistical costs and
promote trades. Investment by Central Government on roads and bridges
has been growing at an annual rate of 39.58% on average since 2010.
8. PROJECTION OF ROADS DEVELOPMENTS
INDONESIAN MINISTRY OF
FINANCE
REGIONAL TREASURY OFFICE FOR RIAU
ISLANDS PROVINCE
2009 2015 (Projected)
Anambas 0 72,714
Lingga 0 65,26
Natuna 118,709 159,026
Karimun 26,641 96,381
Bintan 10,712 134,812
Tanjungpinang 29,724 42,671
Batam 148,209 169,322
0
100
200
300
400
500
600
700
800
Source:Processeddatafromtheministryofinfrastructure
InKilometers
CG’s Road Lengths
The roads developed by the central government on Riau Islands
Province (The province on which BBK Free Trade Zone is located) is
about 334km in the year 2009 (excluding Anambas and Lingga
Regencies which data is unavailabe). Based on the current
development, the road lengths is projected to grow into 740km on the
end of year 2015, approximately 121% increase on a 7 years period.
333,995
740,186
300
400
500
600
700
800
2009 2015 (Projected)
InKilometers
CG’s Road Lengths
9. CURRENT STATE OF ROADS IN RIAU ISLANDS PROVINCE
INDONESIAN MINISTRY OF
FINANCE
REGIONAL TREASURY OFFICE FOR RIAU
ISLANDS PROVINCE
The road density indicator which is a ratio of road lengths to the land areas of the respective province shows that Riau Islands is among the
best compared to other provinces and high above the national ratio. Meanwhile, the road length per 1,000 population indicator shows that
Riau Islands is lagging behind several other provinces but still above the national ratio. Overall, the two indicators shows that Riau Islands
land transportation infrastructure is much better than than the country as a whole, Central Government’s recent spike of budget allocations
on Riau Islands will boost both indicators further.
0,36
0,27
0,21
0,39
0,49
0,55
0,25
0,00
0,10
0,20
0,30
0,40
0,50
0,60
Aceh Riau Jambi Bengkulu Lampung Riau
Islands
National
Source: processed data from BPS (2012)
Road Density by Province
0
1
2
3
4
5
Aceh Riau Jambi Bengkulu Lampung Riau
Islands
National
4,63
4,23
3,35
4,55
2,23
2,69
2,01
Source: processed data from BPS (2012)
Road Lengths per 1,000 population by Province
10. ONGOING CG’s PROJECTS ON RIAU ISLANDS PROVINCE
INDONESIAN MINISTRY OF
FINANCE
REGIONAL TREASURY OFFICE FOR RIAU
ISLANDS PROVINCE
City/Regency
Volume (Road
&Bridge Lengths)
Budget
Tanjungpinang
Municipality
26.38 KM 26.1 billion IDR /
1.9 million USD
Batam
Municipality
121.2KM 237.6 billion IDR /
17.5 million USD
Bintan Regency 2.42 KM 7 billion IDR /
515 thousand USD
Karimun
Regency
20.2 KM 16.6 billion IDR /
1.2 million USD
Natuna
Regency
65.57 KM 92.3 billion IDR /
6.8 million USD
Lingga Regency 25.7 KM 5.5 billion IDR /
405 thousand USD
0
20
40
60
80
100
120
140
0
50
100
150
200
250
InbillionIDR
Budget
(IDR)
Volume
(KM)
Source: processed data from DG of Treasury
*Conversion at spot market rate as of 11 November 2015 (1 USD equals to 13,607 IDR)
11. AIRPORTS DEVELOPMENT IN BBK
INDONESIAN MINISTRY OF
FINANCE
REGIONAL TREASURY OFFICE FOR RIAU
ISLANDS PROVINCE
16.9 21.3
82.6
51.5
127
312.2
0
100
200
300
400
2010 2011 2012 2013 2014 2015
InbillionIDR
Source: processed data from DG of Treasury
CG Budget Allocations
As a province consists of 2,408 islands, Air Transportation has
become the best alternative for people’s transportation in terms
of time. The recent and planned developments of Airports by the
Central Government will encourage travel between islands and
boost trading in the province, BBK as the economic hub of the
province will benefit the most. Investment by Central Government
on Airports has been growing at an annual rate of 113.57% at
average since 2010.
12. ONGOING AIRPORT PROJECTS
INDONESIAN MINISTRY OF
FINANCE
REGIONAL TREASURY OFFICE FOR RIAU
ISLANDS PROVINCE
Karimun airport development will improve the flow of staple foods and basic needs which the island cannot self-sustain therefore reducing living
costs and labour costs. Meanwhile, the development of airport in Dabo Singkep will broaden the opportunity to utilize the relatively more fertile
land of Dabo Singkep to support the needs of staple foods in the Riau Islands Province hence sustaining the export-oriented zone in BBK
13. PORTS DEVELOPMENT
INDONESIAN MINISTRY OF
FINANCE
REGIONAL TREASURY OFFICE FOR RIAU
ISLANDS PROVINCE
94.7 82
138.6
239 263
547.1
0
100
200
300
400
500
600
2010 2011 2012 2013 2014 2015InbillionIDR
Source: processed data from DG of Treasury
CG Budget Allocations
Riau Islands Province area consists of 5% Land and 95% water. Sea Transportation has therefore become the veins of Riau Islands, without it the
province will definitely stagnate. In order to maximize the different range of potentials that each island has and harmonize the fulfillment of
interdependent needs of each island, Central Government has been lavishly allocating spending on port developments. By developing the sea
transportation, BBK can be focused on it’s industries while other parts of the province will support the basic needs of BBK, therefore creating an
ever competitive export-oriented free trade zone . Investment by Central Government on ports has been growing at an annual rate of 49.21% on
average since 2010.
14. ONGOING PORT DEVELOPMENT PROJECTS ON RIAU ISLANDS PROVINCE
INDONESIAN MINISTRY OF
FINANCE
REGIONAL TREASURY OFFICE FOR RIAU
ISLANDS PROVINCE
City/Regency Port Budget
Tanjungpinang Municipality Dompak 42.4 billion IDR / 3.1 million USD
Tanjungpinang Municipality Tanjung Mocoh 22.5 billion IDR / 1.6 million USD
Karimun Regency Malarko 5 billion IDR / 367 thousand USD
Anambas Islands Regency Letung 31 billion IDR / 2.3 million USD
Anambas Islands Regency Midai 23 billion IDR / 1.7 million USD
Anambas Islands Regency Pulau Laut 24 billion IDR / 1.75 million USD
Anambas Islands Regency Subi 76 billion IDR / 5.6 million USD
Anambas Islands Regency Serasan 12.6 billion IDR / 927 thousand USD
Lingga Regency Dabo Singkep 5 billion IDR / 367 thousand USD
Source: processed data from DG of Treasury
*Conversion at spot market rate as of 11 November 2015 (1 USD equals to 13,607 IDR)
15. UTILITIES DEVELOPMENT IN BBK
INDONESIAN MINISTRY OF
FINANCE
REGIONAL TREASURY OFFICE FOR RIAU
ISLANDS PROVINCE
88.5
125.8
254
285 290
449
0
50
100
150
200
250
300
350
400
450
500
2010 2011 2012 2013 2014 2015
InbillionIDR
Source: processed data from DG of Treasury
CG Budget Allocations
Utilities which includes Electricity, Water and Waste Treatment is fundamental to the development of cities and industries. In an attempt to
keep up with the rapid industrial expansion in Riau Islands, Central Government has been increasing it’s Budged Allocations on utilities
exponentially on an average annual growth of 42,59%
16. UTILITIES STATE ON RIAU ISLANDS PROVINCE
INDONESIAN MINISTRY OF
FINANCE
REGIONAL TREASURY OFFICE FOR RIAU
ISLANDS PROVINCE
The commitment to develop Riau Islands Province as a competitive economic hub on the border of Indonesia has successfully increase the
percentage of population having access to electricity by 24.47% in just a 2 years period, outpacing several other provinces in the region.
Province
Electrification Ratio
2009 2011 Increase
Riau
Islands
52.17% 76.64% 24.47%
Riau 38.88% 54.8% 15.92%
South
Sumatra
56.11% 65.18% 9.07%
Jambi 29.9% 32.74% 2.84%
Bengkulu 52.74% 64.48% 11.74%
Lampung 47.75% 61.88% 14.13%
Source: processed data from PT. PLN (2012)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Riau
Islands
Riau South
Sumatra
Jambi Bengkulu Lampung
Electrification Ratio by Province
2009
2011
17. Government Supports on FTZ Agency in Batam (BP BATAM)
INDONESIAN MINISTRY OF
FINANCE
REGIONAL TREASURY OFFICE FOR RIAU
ISLANDS PROVINCE
Category
Budget Allocations
2014 2015
Operational Expenditures
771.3 billion IDR /
57 million USD
747 billion IDR /
54.9 million USD
Capital Expenditures
548 billion IDR /
40.3 million USD
500 billion IDR /
36.7 million USD
Total
1.319 trillion IDR /
97 million USD
1.247 trillion IDR /
91.6 million USD
58,46%
41,54%
Budget Proportion (2014)
Operational
Expenditures
Capital
Expenditures
59,90%
40,10%
Budget Proportion (2015)
Operational
Expenditures
Capital
Expenditures
As a part of it’s endeavour to attract investments and promote Riau Islands Province as a
business-friendly zone, Central Government has been allocating significant budgets to
support Batam Free Trade Zone Agency (BP Batam) which operation includes managing
several strategic entities, developing prioritized areas and providing services for investors
at ease
Source: processed data from DG of Treasury
*Conversion at spot market rate as of 11 November 2015 (1 USD equals to 13,607 IDR)
18. Government Supports on Other FTZ Agencies
INDONESIAN MINISTRY OF
FINANCE
REGIONAL TREASURY OFFICE FOR RIAU
ISLANDS PROVINCE
Regional Development Council
70.4 billion IDR / 5.2 million USD
Secretariat
10.4 billion IDR / 764 hundred USD
Operational
8.6 billion IDR / 651 hundred USD
Promotions
830 million IDR / 61 hundred USD
Equipments
451 million IDR / 33.1 hundred USD
Infrastructures
254.5 million IDR / 18.7 hundred
USD
Bintan Development Agency
25.6 billion IDR / 1.9 million USD
Operational
2.3 billion IDR / 167 hundred USD
Promotions
504.5 million IDR / 37 hundred USD
Infrastructures
22.8 billion IDR / 1.7 million USD
Karimun Development Agency
27 billion IDR / 2 million USD
Operational
3.2 billion IDR / 235.2 hundred USD
Promotions
1.5 billion IDR / 110.7 hundred USD
Equipments
241.2 million IDR / 17.7 hundred USD
Infrastructures
22.4 billion IDR / 1.6 million USD
Tanjungpinang Development Agency
7.3 billion IDR / 538 hundred USD
Operational
3.4 billion IDR / 235.2 hundred USD
Promotions
1.2 billion IDR / 91.3 hundred USD
Equipments
359 million IDR / 26.3 hundred USD
Ifnrastructures
2 billion IDR / 147.6 hundred USD
Source: processed data from DG of Treasury
*Conversion at spot market rate as of 11 November 2015 (1 USD equals to 13,607 IDR)
Aside from the significant
support given to BP Batam,
Central Government also
develop several fledging
FTZ agencies which are
projected to thrive and
hold strategic positions on
promoting and developing
it’s respective area into a
competitive, investment-
friendly zone
19. CONCLUSIONS
INDONESIAN MINISTRY OF
FINANCE
REGIONAL TREASURY OFFICE FOR RIAU
ISLANDS PROVINCE
The implementation of Free Trade Zone supported by broad access between industrial, commercial, residential and shipment areas,
clear labour policy and investment-friendly regulations will boost economics growth and employment rate on the particular area and
trickle into it’s surrounding areas.
The Central Government of Indonesia has been committed to build Batam, Bintan, Karimun (BBK) Free Trade Zone into a competitive
investor-attracting region by establishing several FTZ Agencies and pouring investments into infrastructures into BBK. This
commitment is proved by the average annual infrastructure budget allocations growth rate of 40.86% since 2010.
In the future, the Central Government will be prioritizing even more to develop BBK as part of it’s policy to improve the
competitiveness of the export-oriented zone. This priority is enhanced by the Central Government’s policy to focus construction on
areas with high maritime potentials and border areas to which BBK qualified.
