"Singapore + 1" Key City for Global Layout Strategy

As the provincial capital of Riau Islands Province, Indonesia, Tanjung Pinang is the core city of Bintan Island. As one of Indonesia’s four major free trade zones, the development of Bintan Island’s Special Economic Zone (SEZ) and Free Trade Zone (FTZ) relies closely on its unique geographical location and policy dividends. Below is an in-depth analysis from three aspects: establishment background, investment promotion policies, and core advantages.

I. Establishment Background: Dual Drivers of Strategic Positioning and Regional Synergy

A Key Geostrategic Hub ：Bintan Island is located at the throat of the Strait of Malacca, only 40 kilometers from Singapore, and has historically been a trading hub in Southeast Asia. In the 1990s, the Indonesian government collaborated with Singapore to launch the "Singapore-Riau Growth Triangle" plan, aiming to promote regional economic integration through cross-border cooperation. In 2017, Bintan Island was officially upgraded to a free trade zone, becoming Indonesia’s frontier for connecting with the ASEAN Economic Community (AEC) and the Belt and Road Initiative (BRI).

Top-Level Design of the Policy Framework：Indonesia enacted the Special Economic Zone Law in 2009, explicitly introducing measures such as tax incentives and streamlined approval processes to attract foreign investment. Bintan Island, leveraging its port resources and positioning as Singapore’s "back garden", was included in the first batch of key development areas.Since 2021, the "Singapore + 1" strategy has further promoted the transfer of industries such as electronics and precision engineering to Bintan Island, forming a "front shop, back factory" model with Singapore.

Endogenous Demand for Industrial Upgrading：In the early days, Bintan Island’s economy was dominated by fisheries and agriculture. After the establishment of Bintan Industrial Park in 1994, light industry and manufacturing were gradually introduced. In 2019, the China-Indonesia "Two Countries, Two Parks" project was launched. On the Indonesian side, Bintan Industrial Park serves as the core, driving clustered development of industries such as halal food processing and maritime engineering, and accelerating the transformation from a resource-dependent economy to a processing and trade-oriented economy.

II. Investment Promotion Policies: A Combination of Full-Cycle Support and Flexible Mechanisms

(1) Tax Incentives: Progressive Exemptions and Industry-Specific Preferences

Corporate Income Tax ExemptionEnterprises with an investment of ≥1 trillion Indonesian rupiah (approximately 45 million RMB) are eligible for a 20-year full exemption. Those with an investment of 500 billion to 1 trillion Indonesian rupiah enjoy a 15-year full exemption, while those with 100 billion to 500 billion Indonesian rupiah receive a 10-year full exemption.

Emerging industries such as new energy and the digital economy can obtain an additional tax exemption period of 5-10 years, with an effective tax rate as low as 0%-12%.

Import-Related Tax Exemptions

Imported production equipment and raw materials are exempt from customs duties and value-added tax (VAT). Enterprises in bonded areas can achieve tariff-free operation. For example, bauxite processing enterprises in the Galang Batang Special Economic Zone do not need to pay any taxes or fees when importing alumina processing equipment.

Local Tax Reductions and ExemptionsLocal taxes such as land use tax and stamp duty can be reduced or exempted by 50%-100%, which is specifically negotiated based on investment scale and industry type.

(2) Foreign Capital Access: Relaxed Restrictions and Compliance Convenience

Equity Opening and Ownership Protection

100% foreign ownership is permitted in manufacturing and tourism industries. Enterprises can obtain land use rights through long-term leases (up to 80 years), breaking the foreign capital land ownership restrictions in ordinary regions. Eligible enterprises can apply for fast-track approval through the "One-Stop Service" investment center, shortening the project launch cycle to within 30 days.

Flexible Labor Policies

Foreign-funded enterprises can hire foreign technical personnel. The maximum proportion of foreign employees is 10% initially, and gradually reduced to 5% after 5 years, with the requirement of supporting local employee training programs. Labor-intensive enterprises (such as textiles and electronic assembly) can apply for 8-year ultra-low interest loans with an interest rate of 5%, but must commit to employing more than 50 local employees and accept production data supervision.

(3) Special Incentives: Industrial Clustering and Green Transition

Key Industry Support

Bauxite Processing: The Galang Batang Special Economic Zone focuses on the aluminum industrial chain. The alumina project invested by Nanshan Aluminum is expected to have an annual output of 4 million tons by 2026, enjoying a 15-year full corporate income tax exemption and export subsidies.

Maritime and Offshore Engineering: Bintan Industrial Park has established an exclusive maritime center, offering a 30% reduction in port usage fees for enterprises engaged in ship repair and oil platform services.

Green Economy SubsidiesEnterprises adopting hydrogen metallurgy and photovoltaic technology can obtain an additional 10%-20% subsidy of the total investment, along with exemption from carbon emission tax. For example, a new energy enterprise investing in a photovoltaic module factory on Bintan Island can enjoy triple benefits: import tax exemption for equipment + 10-year full corporate income tax exemption + 15% investment subsidy.

III. Core Advantages: A Competitiveness System Built on Multidimensional Endowments

(2) Resources and Supporting Facilities: Synergistic Effect of Industrial EcologyAbundant Natural ResourcesBintan Island is rich in bauxite (reserves of approximately 280 million tons) and tin ore. Its tropical climate is suitable for agricultural cultivation, providing a stable raw material supply for the food processing industry.Industrial Cluster EffectBintan Industrial Park has formed three major industrial clusters: halal food processing, electronic assembly, and maritime engineering. Enterprises entering the park can share infrastructure such as sewage treatment plants and power plants, reducing operating costs by 10%-15%. For example, after a food enterprise settles in, its packaging material suppliers can set up factories nearby to achieve "zero-inventory" production.

(3) Policies and Services: An Efficient and Transparent Business EnvironmentRegulatory Mechanism InnovationA "Single Window" e-government system is implemented, allowing online handling of 120 services including enterprise registration, tax declaration, and customs clearance, improving approval efficiency by 60%.Security and Legal ProtectionSpecial Economic Zones are classified as national-level security protection areas, equipped with dedicated police forces and fast-track judicial channels. The average processing cycle for foreign-funded enterprise rights disputes is shortened to within 3 months.

(4) Labor and Market: Dual Dividends of Low Cost and High PotentialLabor Cost AdvantageThe average monthly salary of manufacturing workers is approximately 250-350 US dollars, only 1/5-1/4 of that in Singapore. Local universities and vocational colleges can provide targeted technical workers.Regional Market RadiationRelying on the ASEAN Free Trade Area (AFTA) and the RCEP agreement, products from Bintan Island enjoy 0-5% tariffs when exported to ASEAN countries. Access to the Chinese market can reduce tariff barriers through the rules of origin accumulation.

IV. Future Development: Strategic Upgrade and Emerging Opportunities

Conclusion

Leveraging the triple advantages of "a policy high ground + a geographical hub + a resource treasure trove", Bintan Island’s Free Trade Zone and Special Economic Zone have become one of the most dynamic investment destinations in Southeast Asia. For Chinese enterprises, this place is not only a "springboard" to avoid trade barriers and reduce costs, but also a strategic fulcrum to participate in regional industrial chain restructuring and layout new energy and the digital economy. In the future, with the in-depth implementation of Indonesia’s "Global Maritime Fulcrum" strategy, Bintan Island is expected to further consolidate its position as the "gateway to the Strait of Malacca" and create greater value for investors.