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View all search resultsBatam FTZ status prevents local MSMEs entering national market
Goods, including non-commercial ones, shipped from Batam have to pay high taxes to enter Indonesian customs area.
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Store owner Edward display snacks on Dec. 4, 2025, at his store at Windsor Phase shopping avenue in Batam city, Riau Islands. Micro, small and medium enterprises in Batam are finding it difficult to transport their products to other regions due to having to pay high taxes to enter Indonesian customs through the Batam free trade zone. (JP/Fadli)
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atam’s status as a free trade zone (FTZ) is preventing Batam-based micro, small and medium enterprises (MSME) from entering the wider national market because they have to pay high taxes to send their products through Indonesian customs.
“In addition to high tax, shipment costs from Batam are also very high, amounting to a total of 40 percent of the goods’ value,” head of Bank Indonesia representative office in Riau Islands, Rony Widijarto told The Jakarta Post on Monday.
“Once the goods are received by the couriers, they are slapped with a cost of 18 percent to 40 percent.”
These conditions cause the price of Batam-based MSMEs products, such as crackers and sea products, to be more expensive, and unable to compete in the national market.
Read also: German, US chip investors urge faster permits for Batam facilities
Rony added this condition also contributed to the high unemployment rate in Riau Islands, which is also higher than the national average.
He emphasized that to solve the problem, gaps in the existing regulation should be found, especially those related to MSME clusters. He said that there was a regulation allowing MSMEs using local raw materials to be freed from tax charges.
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