Companies seeking to expand manufacturing in Southeast Asia are discovering the advantages of Batam, Indonesia – a small island just South of Singapore that’s become a popular manufacturing hub. In 2020 alone, foreign investment in Batam reached 1.65 billion USD, covering nearly 3,000 projects.
Key to Batam’s growth has been well-developed logistics operations that efficiently move cargo to and from Batam.
What’s driving businesses to Batam?
Several factors make Batam an economical hub for manufacturing and distribution.
- Abundant labor pool. Indonesia is the world’s fourth largest country by population. The country’s relatively low labor rates make it a cost-effective manufacturing option.
- The government of Indonesia has established special economic zones and free trade zones. Companies manufacturing in the Batam Free Trade Zone are exempt from import duties, luxury tax, and value added tax.
- Batam’s logistics infrastructure is improving. Roads have been upgraded and Hang Nadim International Airport has the longest runway in Indonesia to serve cargo planes and wide-body aircraft. It also helps that Batam is just 12 miles from Singapore – Asia’s top logistics hub.
- Batam has benefited from a “China Plus One” strategy. For instance, large Taiwanese tech manufacturer Pegatron opened a factory in Batam to expand manufacturing performed in China.
Batam logistics infrastructure
Batam is an effective industrial hub because of a strong warehousing and freight network that can keep raw materials and finished goods moving to and from the island. Dimerco has invested to become a leading freight and logistics partner for Batam operations. We operate a busy forwarding office and FTZ warehouse in Singapore, plus logistics centers across Indonesia in Batam, Jakarta, Semrang and Surabaya (Dimerco operates as Uniair Cargo in Indonesia).
Singapore is a strategic logistics hub for distribution of materials to and from Batam. There is no long-haul direct service to Batam, so ocean carriers operate a regular feeder service between Singapore and Batam. Singapore indirectly connects Batam with 600 global airports and seaports in 120 countries. Dimerco’s FTZ warehouse in Singapore (located in the Airport Logistics Park at Singapore’s Changi Airport) frequently serves as a transshipment point for cargo moving to or from Batam. This allows shippers to avoid a goods and services tax (GST).
Exports from Batam
For exports from Batam, a sea-air multimodal freight solution via Singapore can enable ship times of 1 day to other Asian countries, 2 days to Europe and 3 days to the US, as shown in the accompanying diagram.
The rapid ship time is particularly beneficial to electronics company supply chains that need to get products to market quickly due to shorter product life cycles.
Dimerco can serve as the exporter of record in Singapore and handle deconsolidation at its 24/7 Singapore FTZ warehouse, arranging shipments to numerous global destinations.
Imports into Batam
For cargo flowing into Batam – either to support manufacturing or to reach Indonesia’s huge consumer market – Dimerco can be a single-source solution for freight originating anywhere in China or Southeast Asia and delivering to Batam. For instance, for a large electronics company Dimerco arranges cross-border truck shipments from Bangkok, Thailand through Malaysia and into its Singapore warehouse, where trailers get unstuffed and re-loaded onto containers. Cargo is then shipped to Batu Ampar Port in Batam, deconsolidated and then delivered to multiple consignees. Separate shipments can move under one BOL, saving the time and cost of multiple shipment declarations.
Also, since Dimerco’s Singapore warehouse is within a bonded zone, the transshipment incurs no GST.
Single-source partner for Batam logistics
If you ship goods to or from Batam’s booming industrial zone, it helps to work with a logistics partner that can provide single-source, door-to-door logistics services globally, including freight forwarding, customs brokerage, warehousing, and first- and last-mile trucking.
Dimerco and its subsidiary for Indonesia logistics, Uniair Cargo, have provided logistics support for cargo moving to and from Batam since 1980. Contact us to discuss how we can work together to connect your Asia-based operations with the world.