Tanjung Sauh Integration into FTZ Sparks Investor Concerns

Background of Tanjung Sauh Development

Tanjung Sauh, an 840.6-hectare area in Batam, was initially designated as a Special Economic Zone (KEK) through Government Regulation 24/2024. However, just a year later, the Indonesian government decided to integrate this area into the Free Trade Zone (FTZ) through Government Regulation 47/2025. This rapid change in status has raised concerns among investors and stakeholders about the continuity and stability of investments in the area.

Investor Concerns and Potential Impact

Gede Sandra, a researcher from Lingkar Studi Perjuangan, highlighted that the sudden change could negatively impact investor confidence. The shift from KEK to FTZ status within such a short period may create uncertainty about the regulatory framework and investment incentives in Tanjung Sauh. Investors typically look for stability and clear long-term policies when committing to large-scale investments.

Government Perspective and Rationale

While the government has not explicitly stated the reasons for this change, integrating Tanjung Sauh into the FTZ is likely aimed at enhancing its attractiveness to both domestic and foreign investors by offering more favorable trade and tax incentives. FTZ status typically provides exemptions from certain taxes and customs duties, which can be a significant draw for businesses looking to establish manufacturing or trading operations.

Future Outlook

The success of Tanjung Sauh as an FTZ will depend on how effectively the government can harmonize the regulatory framework and provide clarity to investors. Ensuring that the integration into the FTZ does not disrupt ongoing and planned projects will be crucial. The government needs to communicate clearly with stakeholders and ensure that the new status as an FTZ translates into tangible benefits for investors.