Indonesia industrial free zones
- Indonesia currently boasts only one free trade zone (FTZ) which is Batam Free Trade Zone;
- Unfortunately, companies registered within Batam FTZ still suffer a corporate tax rate of 30%;
- However, Batam FTZ companies enjoy exemption from import and export duty on machine, spare parts, and raw materials for production purposes. Imported goods are also exempted from VAT;
- Batam FTZ offers double taxation avoidance for 65 countries including Australia, USA, United Kingdom, Germany, Vietnam, Philippines, Mauritius, Singapore, and Malaysia;
- Batam FTZ is located within the Indonesia – Malaysia – Singapore growth triangle and can be accessed by all modes of transportation including air, land, and sea; consequently, this location enables more efficient logistics for investors;
- Companies operating in Batam FTZ enjoy an ample supply of cheap labor and land compared to its neighbors. The average monthly labor cost is US$100-145 while average land rent is around US$2 per square meter per month;
- These FTZs invites multinationals from the business sectors of electronics, manufacturing, shipping industry, and oil and gas production.
| Summary at a glance | Batam Free Trade Zone |
|---|---|
| Average annual Industrial space rent per 1000 sqm | US$24,400 |
| How long to set the company up? | 3 months |
| How long to open company bank account? | 3 – 4 weeks |
| Allowed to sign sales contracts with Indonesian Clients? | Yes |
| Allowed to invoice Indonesian Clients? | Yes |
| Corporate tax payable in Indonesia | Yes |
| Corporate bank account | Yes |
| Physical office space required | Yes |
| Industrial space availability | Many |
| Allowed to import raw materials? | Yes |
| Allowed to export goods? | Yes |
| Wholly foreign owned | Yes |
| Can the entity hire expatriate staff in Indonesia? | Yes |
| Do you visit Indonesia for company incorporation? | No |
| Minimum number of directors | 1 |
| Minimum number of shareholders | 2 |
| Tax registration certificate required | Yes |
| Individual shareholders allowed | No |
| Corporate shareholders allowed | Yes |
| Corporate director(s) allowed | Yes |
| LLC company allowed | Yes |
| Can apply for immigration visas | Yes |
| Annual audited financial statements | Yes |
