NOW AND TOMORROW

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Batam in Brief

BATAM has undergone a remarkable transition over the past four decades and, in particular over the 15 years from 2000. From a little-known island with around 6,000 ‘Sea People’ living in fishing kampongs along the seashore and a single state-owned oil industry services base, it has become a modern island of around 1.5 million people and a locomotive of industrial growth for the region. This is a brief bullet points snapshot of the Batam of today and a glimpse of what the next decade is likely to bring.

This summary of current facilities and developments and proposed projects is based on publicly available information as at mid- 2015 – it is highly probable that further change and growth will come with the advent of the ASEAN Common Market to be implemented from December 2015 through 2018. The ASEAN integration of South-east Asian economies will create a market-place of some 620 million - larger than the European Union or North America - the third-largest labor force in the world behind China and India, and a growing consumer class. Existing trade and business barriers will be eased allowing easier movement of goods and skilled labor between the 10 participating countries. Current foreign investment rules also will be eased. With its strategic location and established industrial base and infrastructure Batam is sure to be a major beneficiary. Batam 2015

LOCATION – Batam is an island city and centre of heavy industry and manufacturing within the Islands Province of strategically located 20 kilometres (12 miles) across the Strait from .

AREA – Batam (incorporating the Barelang islands of and Galang) covers 715 Sq km which is about the same as the area of Singapore (718 Sq Km).

GOVERNMENT – From the 1970s until 2000 the development and administration of Batam was under the control of the central government in through an appointed Batam Industrial Development Authority. Decentralized local Government commenced from 2001 with the establishment of a city administration and an elected regional people’s assembly (DPRD).

POPULATION – in 1970 Batam had a population of only about 6,000 - mainly ethnic Malay “Sea People”. By 2010 the population exceeded a million. The 2015 estimate is around 1.5 million. Over the inter-census period to 2010 the population grew at more than 11% a year – the fastest growth of any region in Indonesia. Batam is now estimated to be growing at about 8% a year. It is the third largest city in and in 2012 ranked as Indonesia’s 12th largest city. It is forecast to be 7th or 8th after the next census. (By way of comparison Perth and Brisbane with populations of just over 2m are growing at around 2.5%.)

SPECIAL ECONOMIC ZONE – Batam has been designated a Special Economic Zone (SEZ) since 2007 under an agreement between the Governments of Indonesia and Singapore. This makes it easier for capital, materials, components, products and labor to move between Singapore and Batam and has streamlined approvals and licensing processes for new investment.

FREE TRADE ZONE – The Indonesian Government formally declared Batam and the neighboring SEZ islands of Karimun and Bintan a Free Trade Zone from January 2009. This provides exemptions from Customs rules and a range of taxes including import duties, sales tax, value added tax, and taxes on luxury goods to further boost investment.

INVESTMENT – The Batam SEZ administration puts cumulative direct investment into the Batam economy at almost US$18 billion as at the end of 2014 with nearly Batam 2015 Horizon half of this being direct investment by foreign companies. Some 1,700 fast ferry - foreign companies from 38 countries have established operations in one of Batam. four major operators ECONOMIC GROWTH – Industrial development in Batam began in the early 1970s with a services and logistics base for the national oil company . Over the next 30 years it became recognized as the fastest growing economic region in Indonesia and one of the fastest growing regions in South-east Asia. Regional economic growth rates ranged from 5.8% to 8.3% a year over the period from 2010 to 2014.

EXPORTS – According to the Batam Indonesia Free Trade Zone Authority, non-oil and gas exports from Batam averaged around US$9 billion a year over the five years 2010 to 2014.

FOREIGN VISITORS – International tourist and business visitors to Batam totalled 1.45 million in 2014. This was exceeded in Indonesia only by (3.24 million) and Jakarta (2.24 million).

AIRLINE SERVICES - Batam’s airport recorded around 5..5 million passenger movements in 2014, making it Indonesia’s 7th largest airport. Daily passenger aircraft movements averaged 116 flights per day. Domestic services are increasing and direct international flights to South-east and North Asian ports are being introduced.

ERRY SERVICES – Modern fast ferries provide more than 120 crossings each way between Singapore and five Batam terminals every day. Ferries run from around 6 am until around 9.30 pm. Passengers both ways total about 10,000 on weekdays with this increasing by as much as 100% at weekends. Other Batam ferry terminals provide links to nearby islands, particularly Bintan and Karimun for domestic passengers and vehicles.

FOREIGN WORKFORCE – As at 2014 there were almost 6,000 ex-patriot workers in Batam. The formal Indonesian workforce was estimated at 330,000 plus. Batam has a significant informal economy. Batam Centre Ferry Terminal - one of five international terminals Below - New US $70m gas fired power station nearing completion at Tanjung Uncang industrial area. The undersea gas pipeline to fuel the plant is costing a further US$50m. Batam electricity consumption is increasing by around 13% a year due to increasing population and the growth of industry. Infrastructure

ELECTRICITY – Demand for electricity in Batam is estimated to be increasing by around 13% a year, reflecting both population growth and growing commercial and industrial consumption. The present electricity supply of some 510 MW (2014) is scheduled to be increased to more than 700 MW by 2017.

WATER – Batam’s water is supplied from six man-made reservoirs with a treatment works meeting WHO quality standards and a capacity of 2,903 litres per second. A new seventh water supply dam is nearing completion (2015) at a cost of some US$30m.

ROADS – Batam has around 1,200 km of sealed roads (2014). This is more than 50% of the total for the whole Province yet Batam is only 1.9 percent of the total area of the Province. The impres- sive Barelang link Batam with Rempang and Galang islands. ABOVE - Pax Ocean shipyard AIRPORT – Batam’s Hang Nadim International Airport has a current at Tanjung Uncang, one of capacity of 6 million passengers a year and works are underway to more than 70 Batam yards increase this to 8 million. Hang Nadim has the longest runway in Indonesia at just over 4 kilometres and is capable of handling Boeing 747 LEFT - Busy apron at Batam’s and the Airbus 380 aircraft. Services from Batam are predominantly to Hang Nadim Airport - more domestic ports around Indonesia. There are currently international than 5.5m passengers a year services to and charters to Saudi Arabia for Mecca pilgrims. There are plans for international flights to other South-east Asian and North Asian ports to commence in 2015. The airport also handles heavy volumes of air freight from throughout Indonesia.

SEAPORTS – Batam has five International ferry terminals plus domestic terminals and four cargo ports. Heavy volumes of freight move constant- ly between Batam and Singapore and to and from Batam and other Indonesian ports.

COMMUNICATIONS – Major Indonesian telecommunications providers are present in Batam with advanced fibre-optic cabling, wireless links and telcom data services providing ever faster broadband connections. International backbones are accessed via undersea cable systems through Sumatra, Jakarta and Singapore. BATAMINDO industrial estate at Muka Kuning - light manufactures Infrastructure

INDUSTRIAL PARKS - There are 22 industrial parks in Batam housing more than 1,000 foreign companies and 10,000 local companies. A who’s who of multi-national companies is engaged in heavy fabrication and manufacturing ranging from ship-building, oil rigs and dump trucks to sailing dinghies, electronic chips, packaging and fashion handbags. Larger industrial estates have their own water supply and waste water treatment works, workers dormitories, executive housing and supporting commercial facilities such as banks, restaurants and food courts, shops, sport centers, and medical facilities. Some of the larger industrial estates also have their own electricity supply system.

SHIPYARDS – Batam is Indonesia’s major ship building and repairs centre and becoming one of the major industry players South-east Asia Massive J Ray Mcdermott oil and gas industry with more than 70 operating shipyards and others planned. The Batam yards build mainly smaller vessels (service vessels, drill ships, patrol boats, tugs, barges, etc) and undertake conversions and repairs. They also fabricate jackets, topsides, modules and other heavy structures for the oil and gas industry.

HOSPITALS AND MEDICAL – Batam has five major government and private hospitals plus a number of smaller hospitals and health clinics in local communities and outlying areas. There also are many private medical practices, usually with associated pharmacy services, and labora- tory services. A major national in-service training centre for health professionals opened at Marina City, Batam in 2011.

EDUCATION – Batam has six private universities and a public Polytechnic providing tertiary education. The universities are generally small campus- es typically offering a limited range of degree and diploma courses in law, business management, accounting, marketing, languages, computing and IT. Batam Polytechnic also offers degrees in technology sciences. There are two private international schools and a growing number of public and private schools offering classes from kindergarten to senior high school. There is a public Maritime University and an Islamic University in Tanjung Modern and well equipped Awahl Bros private hospital, Baloi Pinang on the neighboring island of Bintan. Administration Precinct

Administration offices are clustered in a precinct at Batam Centre which includes the Batam branch of the Bank of Indonesia, The Immigration Department, Electricity and Gas authorities, the law courts, Telcos, local government offices and the SEZ and Free Trade Zone authorities.

TOP - Office of the Mayor and Batam city administration (left) and the People’s Elected Assembly (right)

ABOVE - City Central Park area, under on- going development at Batam Centre

LEFT - Striking Telcomsel headquarters, Batam and RIGHT - Batam Polytechnic. Resorts New hotels Shopping

Harris Resort Hotel at Marina City, Batam (Above), new Nagoya Hill Hotel (Right) opened in May 2015, and (below) I-Hotel Penuin, opened in early 2015. Seaside pool area at Turi Beach Resort, Nongsa

EIGHT modern shopping malls - Interior Mega Mall (above) at Batam Centre, ice skating (Left) at Kepri Mall and (below) Kepri Mall entrance one. Infrastructure

SHOPPING CENTRES – As at 2015 there are 10 major shopping malls in Batam with plans for more. Most have been built and opened since 2006. Another is under construction in the dormi- tory suburb of Batu Aji and there are plans for more. The centres offer a wide range of modern shopping outlets plus, restaurants, food halls, games areas and cinemas.

GOLF COURSES – Batam has six quality championship standard golf courses – five of 18 holes and one of 27 holes. There is a further 9-hole resort course at Nongsa and three international standard courses a short ferry journey away on the island of Bintan. Golf enthusiasts from Singapore and Malaysia regularly visit Batam to enjoy the high quality facilities and relatively low green fees and other costs. Golf tour groups travel from as far as Korea, Japan and Australia.

HOTELS & RESORTS – Batam boasts more than 75 star-rated hotels more being built and opened every year. There also are many non star-rated properties catering for budget visitors. Major international brands are now moving into the Batam accommodation market with five major brand developments under way in 2015. There are two resort areas on the island with four high quality resort properties located in the Nongsa area to the north and two properties in the suburb of Waterfront City to the south.

MOVIE STUDIO – The US$10 million Infinite Studios opened at Nongsa in 2011 with two sound stages and a one-hectare back lot. International features and TV mini-series have been filmed there. Facilities include an animation studio producing syndicat- ed work for local and international markets. The studios comple- ment film and TV production and post-production facilities in Singapore. There are plans for an associated residential resort now being marketed as “The Scene”. Batam View Resort at Nongsa, Batam

Current and Future Projects As at mid -2015, massive infrastructure developments are underway and planned for Batam. These include:

AIRPORT – Extensions to Terminal 1 and upgrading of air facilities at Hang Nadim airport costing US$30 million now underway will take passenger capacity to 8 million a year. Building of a second terminal and eight extra air bridges is scheduled to commence in 2017. This will take total passenger capacity to 16 million.

SEAPORT – A US$31 million upgrading of the Port of Batam, the island’s main cargo seaport at Batu Ampar, is nearing completion. The project has provided additional wharf space, new cranes and container handling equipment. The upgraded port will have an annual capacity of 600,000 twenty-foot equivalent units (TEUs), compared with 230,000 previously.

LAND DEVELOPMENT - Reclamation, land clearing, road building and installation of services for housing and industrial and commercial developments is on-going in Batam. HEALTH TRAINING CENTRE - This National In-service Health Training Centre opened at Projects Tanjung Uncang in 2011 and provides training for doctors and health professionals from POWER GENERATION – A US$70m gas turbine power station is nearing throughout Indonesia completion at Tanjung Uncang industrial area on the south of the island. Dual turbines will initially produce an additional 70 MW of electricity. A US$50 million undersea pipeline has been built and laid from Pemping Island to fuel the turbines. There are plans for a further 35% expansion of Batam’s electricity output to meet increasing demand.

ROADS – Work is due to begin in 2016 on a new toll freeway to link Batam’s key centres and ease increasing traffic congestion. The freeway will run from the Airport and Kabil industrial estate in the North to Batam Centre, the Batu Ampar seaport and Nagoya and then south to Sekupang and Tanjung Uncang. There also will be a link to the Muka Kuning and Panbil industrial areas. The project is to be built in several sections simultaneously which authorities say will reduce completion time to two to three years.

MONORAIL – The preliminary tendering process began in 2014 for a proposed mono-rail passenger transport system to link Batam’s dormitory suburbs with industrial estates, the main CBD areas, the airport, health precincts, resort areas and ferry terminals. The project is planned to be built progressively over the period to 2027.

DEEP WATER CONTAINER PORT – Long held proposals for development of a deep water container port at Tanjung Sauh, a small off-shore island between Batam and Bintan, has been given a high priority in the new national government’s plans for the development of Indonesia’s maritime and shipping infrastructure. Planning provides for an initial 2km of wharves handling four million TEUs (twenty-foot container equivalent units). It is estimated the project would require an initial investment of more than US$1 billion. It is intended to be part of a 'sea corridor' along with the six large ports of , Jakarta, , and Dragon fruit farm at Barelang - agriculture is a minor activity in Sorong, serving as transit points for smaller feeder ports for exports and Batam but fishing, fish farming and processing is substantial. imports across the Indonesian archipelago. BATAM TO BINTAN BRIDGE – The Batam Special Economic Zone Island, a 3.9-kilometer stretch connecting Tanjung Sauh and Buau Authority has been sounding out overseas interest in building a Island and a 700-meter stretch connecting Buau and Bintan. It would 6.7-kilometre bridge between Batam and Bintan. The bridge would cost an estimated US$580 million. When linked Batam and Bintan will consist of a 2.2-kilometer stretch between Batam and Tanjung Sauh together represent an area about four times the area of Singapore. Projects

FERRY TERMINAL UPGRADE – The Harbor Bay Ferry Terminal is undergoing a major upgrade with new arrival and departure halls, offices, lounges and retail space. The terminal will link with the new Marriott Hotel being built on adjacent foreshore land. The original terminal opened on about six years ago but became inadequate to handle passenger volumes.

OIL REFINERY – Government authorities are reviewing two separate proposals for the development of oil refineries in offshore locations off Batam. An Azerbaijan proposal provides for a $4.8 billion refinery, with a planned production capacity of 600,000 barrels per day. A second proposal from an Indonesian company is for a US$500 million refinery project on NIpa Island between Batam and Singapore. National government policy calls for the development of new refineries around Indonesia with Batam nominated as a selected regional location.

ABOVE - Artist’s rendering of Best Western Condotel and apartments project at Kabil - one of five major branded hotels now under construction in Batam.

RIGHT - Construction progress on Best Western project as at June, 2015 Section of Terminal 1at Batam’s Hang Nadim Airport - Construction of Terminal 2 planned to start in 2017 AIRCRAFT MAINTENANCE HUBS – has recently occupied a US$250 million aircraft maintenance base for its fleets of Boeing and Airbus jets on land adjoining the Hang Nadim airport. When completed in 2016 it will have four wide-body hangars and employ some 2,000 technicians. Garuda, the national flag carrier, has announced plans for a similar facility. The airlines are relocating maintenance operations to Batam due to chronic crowding and lack of available space at Soekarno-Hatta airport in Jakarta.

BARALANG BRIDGES

BATAM is linked to the nearby islands of Rempang and Galang and smoe smaller islands by a series of six iconic bridges. These areas are being developed as part of the total municiplaity. Two of the bridges are pictured at right. Branded Hotels

MARRIOTT

ABOVE - Artist’s rendering of Aston Hotel and Residence now under construction (see inset) at Pelita, Batam

FIVE NEW major branded hotels are now under construction in Batam (July 2015) signaling a “coming of age” of the city’s accommodation industry. They include a Marriott Hotel at Harbor Bay, an Aston Hotel (and apartments) at Pelita, a Raddison Hotel at Suka Jadi and a Best Western Condotel at Kabil. A Starwood Hotel (a Sheraton brand) is included in the Bliss Park development near Baloi. Two major unbranded hotels have just opened (2015) – the Nagoya Hill Hotel and Batam’s second I-Hotel ABOVE- Rendering of new Raddisson Hotel at Sukajadi at Penuin. The Holiday Inn, Mercure, Harris and Allium and (RIGHT) construction progress brands are already established in Batam. Apartment Projects

Construction is well underway on the Bliss Park project. The distant building is the Mansions apartments BATAM’S largest apartments project, Bliss Park, commenced in 2014 and is scheduled to continue until 2022. The first tower of more than 30 storeys is rising at the rate of two floors a month (and is around 80% pre-sold). The complex will have 2,000 apartments, 11,000 sq m of retail and commercial space and a 150-key Sheraton Four Points Hotel plus associated undercroft parking. Batam’s largest completed Apartments project is the 20-floor Mansions complex which has 600 apartments and also houses a 4-star hotel. It has been occupied from 2013. These and other big projects are dramatically changing Batam’s skyline. Austin Engineering plant at Industry Kabil industrial estate

Dump truck bodies assembly line at Austin Engineering at Kabil, Batam

A STEADY FLOW of new industrial undertakings is being attracted by Batam’s strategic location, low costs, available labor and developed infrastructure. Recent newcomers have included the American Caterpillar multi-national who have opened a US$120 million assembly and fabrication plant at Tanjung Uncang (and are already planning expansion) and Yokohama who are just opening a major belting plant at Kabil.

BELOW - The new fabrication plant for PT Caterpillar Indonesia at Tanjung Uncang will produce dump truck chassis and bodies for the mining industry throughout the Asia-Pacific region. Industry

ABOVE- Heavy lift load out of Curtis Island module from SMOE yard.

LEFT and BELOW - The original SMOE yard at Kabil now being expanded with new North Yard

SINGAPORE- BASED fabrication company SMOE specialises in offshore fixed and floating Production facilities and established an 85-hectare yard at Kabil, Batam in 2003. It is now (2015) expanding into an additional North Yard opposite the original facility. Over the past three years the yard has been producing modules for the Curtis Island gas trains in Queensland and the Wheatstone project in Western Australia in conjunction with Bechtel. Fish Farming Extensive inter-island waterways, tides of around 1.5 metres andclean waters make the Barelang area to Batam‘s south a preferred location for aquaculture. The joint French-Indonesian hatchery venture pictured below near 1 aims to produce 2 million Barramundi and 1 million Groupe fingerlings a year.

Local fish farms grow out the hatchery fingerlings

Fish hatchery on the Barelanag Island of Rempang just south of Batam Island. Note the towering bridge pylons in the top right of this picture.