AFTER lunch at a nearby mall, Mark (a pseudonym), 63, placed his suitcase in a taxi and headed for Singapore\u2019s Tanah Merah Ferry Terminal. Ten minutes later, he was at the counter buying his ticket \u2013 a routine he knows well. After clearing security, he boarded the ferry bound for Bintan, Indonesia.<\/p>\n
Chinese businessmen in Indonesia<\/h2>\n
For more than a year, Chinese businessman Mark has made this journey almost every two months, flying from China to Singapore before continuing by sea to Bintan. His factory there began operations in July 2024 and is now running smoothly, though his regular visits remain essential. There are still matters that require his oversight \u2013 from production adjustments to meetings with local partners.<\/p>\n
Six months ago, Gong Hao (a pseudonym), 40, also from China, set foot on Batam for the first time \u2013 just a short ferry ride across from Bintan. The island\u2019s infrastructure, he soon realised, lagged far behind China\u2019s. But what it lacked in polish, it made up for in potential. Demand for factories and housing was booming. Seizing the opportunity, Gong decided to stay. He rented an office, hired more than ten local employees, and began taking on factory construction and renovation projects.<\/p>\n
Influx of Chinese capital<\/h2>\n
Mark explained that the raw and auxiliary materials his company uses are mainly imported from Africa, the Americas, and Europe, while the finished products, such as fragrances and flavourings, are sold back to the international market. Without establishing the factory within a free-trade zone, the high import and export tax costs would have been unbearable.<\/p>\n
Batam and Bintan offer a range of tax and fee incentives to enterprises operating within their zones. Under certain conditions, these include exemptions or reductions on import duties, value-added tax, and income tax on imported goods, as well as simplified customs procedures.<\/p>\n
As early as 1973, Batam was officially designated as an industrial development zone. In 2007, the Indonesian government further incorporated Batam, Bintan, and Karimun into its system of free-trade and free-port zones.<\/p>\n
A NEWSLETTER FOR YOU<\/h5>\n![\"Newsletter](\"https:\/\/www.businesstimes.com.sg\/assets-web2\/newsletter_asean-xylFrz18.png\"\/)
<\/p>\n\nFriday, 8.30 am<\/p>\n
Asean Business<\/h5>\n
Business insights centering on South-east Asia’s fast-growing economies.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n
In the past, investors in Batam and Bintan mainly came from Singapore, Japan, Europe, and the US, with industries concentrated in electronics components, tourism, and resource processing. According to data from the Free Trade Zone (FTZ) authorities of both islands, Singapore has long been the largest source of foreign investment.<\/p>\n
In recent years, however, Chinese capital has surged into the area at an astonishing pace, standing out prominently amid what used to be a diversified landscape of foreign investors. Taking Batam for example, figures from its FTZ authority show that Chinese investment rose from US$17.32 million in 2022 to US$51.71 million in 2023, before rocketing to US$253 million in 2024, a nearly fifteen-fold increase over three years.<\/p>\n
When China\u2019s economy stalls: a contractor\u2019s escape to Batam<\/h2>\n
In March 2023, Mark made his first visit to an industrial park on Bintan Island. The park\u2019s infrastructure \u2013 roads, power supply, and water facilities \u2013 exceeded his expectations. More importantly, the factory site was only about an hour by ferry from Singapore\u2019s port, and import-export procedures were relatively straightforward. He immediately concluded that the location met his relocation needs, signed an agreement with the park four months later, and after nearly ten months of approvals and construction, the factory was successfully established.<\/p>\n
\n\n\nSEE ALSO<\/p>\n
\n\n\n\n![\"The](\"https:\/\/cassette.sphdigital.com.sg\/image\/businesstimes\/9bc6707ab5f220ee7a45dd3cf3968693c0cfa9ea29fdb6b4e5c13de57a647a50?w=960&dpr=1&f=webp\")
<\/a><\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\nMark\u2019s case represents a proactive relocation by taking advantage of policy opportunities, whereas Gong Hao\u2019s journey overseas was one of necessity amid debt and hardship.<\/p>\n
Gong Hao had been a contractor for 15 years, taking on many government projects. But as China\u2019s economy slowed over the past few years, many payments were left in limbo. To finish the work, he borrowed heavily from relatives and friends \u2013 yet the government funds he was promised never arrived. Today, local authorities still owe him more than three million yuan (US$548,661).<\/p>\n
\u201cI tried every possible way to get them (the local government) to pay, but it was futile. The main contractors are owed even more \u2013 some in the hundreds of millions of RMB.\u201d Crushed by debt and with no way to recover his payments, he followed a friend to Batam Island to start anew, as many peers faced the same plight.<\/p>\n
Lower costs and abundant natural resources<\/h2>\n
According to Wijayanto Samirin, senior economics lecturer at Paramadina University in Jakarta and former adviser to Indonesia\u2019s vice-president, China\u2019s manufacturing sector has in recent years faced rising production costs and a complex geopolitical environment, making overseas diversification necessary. Indonesia\u2019s relatively low labour costs and abundant natural resources provide investors with a competitive edge, making the country an increasingly attractive destination.<\/p>\n
Wijayanto added that in the past, Chinese investment in Indonesia had focused primarily on natural resources and commodities. Now that China is expanding its manufacturing investments in Batam and Bintan, \u201cit is a positive shift.\u201d<\/p>\n
This trend is reflected in Indonesia\u2019s export data for July. According to Bloomberg, in the first half of 2025, Indonesia\u2019s top ten exporters of solar cells and solar panels shipped US$608 million worth of panels and cells to the US. Six of those companies are based in Batam, and investigations revealed that these firms were actually owned by senior executives of Chinese solar companies. Together, they accounted for nearly 70 per cent of Indonesia\u2019s related exports to the US.<\/p>\n
However, this surge of capital has not only shown up in robust industrial and trade activity \u2013 it has also stirred sensitivities involving land, communities, and the environment.<\/p>\n
Surge of investment stirs unease<\/h2>\n
In 2023, a \u201cgreen city\u201d project by China\u2019s Xinyi Glass on Rempang Island, adjacent to Batam, triggered fierce local opposition. The global glass and solar panel giant planned to invest US$11.6 billion to develop the project, which would require the relocation of about 7,500 residents.<\/p>\n
According to reports from Kompas and The Jakarta Globe, the project had been designated a national strategic project under former president Joko Widodo\u2019s administration, and the relocation process began at the end of 2023. However, local residents strongly opposed the government\u2019s resettlement plans, staging multiple protests and clashing with police.<\/p>\n
A similar dispute emerged on Bintan Island, where Bloomberg reported that a subsidiary of China\u2019s Nanshan Group planned to expand its industrial park in the island\u2019s southeast and on nearby Poto Island, building aluminium smelting, steel, and petrochemical facilities, along with a port. Resort operators and environmentalists opposed the plan, warning that construction could threaten coral reefs and disrupt the island\u2019s tourism ecosystem.<\/p>\n
Social turmoil puts Chinese investment plans on hold<\/h2>\n
While such land and environmental conflicts represent localised project risks, Indonesia\u2019s nationwide protests in late August 2025 expanded uncertainty to a broader scale. In Jakarta and other cities, widespread demonstrations erupted over lawmakers\u2019 high salaries and housing allowances. Heavy-handed police crackdowns quickly inflamed tensions, leading to casualties and triggering turmoil in financial markets.<\/p>\n
Although the wave of protests had nothing to do with foreign investors, Batam-based Gong Hao decided to suspend his company\u2019s operations at that time, instructing employees to stay home and avoid going out. \u201cYou can\u2019t rule out the possibility that some people, stirred by emotion, might turn their anger towards outsiders,\u201d he said.<\/p>\n
For Gong, such concerns were not unfounded. He had previously heard of clashes between Chinese-funded enterprises and local residents on Batam and Bintan, and he viewed this as a common potential risk for foreign investors operating in the region.<\/p>\n
Gao Xiaoyu, general manager of Yard Zeal Real Estate, a firm that assists Chinese companies in establishing operations in Indonesia, revealed that the demonstrations had already caused some clients to back out. \u201cMany of our clients are worried. Some have already cancelled or postponed their investments in Indonesia.\u201d<\/p>\n
She predicted that the uncertainty arising from social unrest would likely persist into the second half of the year, and that over the next few years, some Chinese enterprises may drop Indonesia from their list of preferred destinations for overseas expansion.<\/p>\n
However, industrial park operators and local intermediaries on the islands offered a different perspective on the recent unrest.<\/p>\n
Both Batam and Bintan remained calm<\/h2>\n
Edmund Lai, chief marketing officer at Gallant Venture, stressed that Batam and Bintan were unaffected by the protests. \u201cIf there had really been demonstrations, my clients would have called me immediately,\u201d he said firmly. \u201cI can assure you that both Batam and Bintan were calm at the time \u2013 everything was normal.\u201d<\/p>\n
Gallant Venture is a commercial and industrial property developer that operates one industrial zone each on Batam and Bintan, with many Chinese clients among its tenants.<\/p>\n
On 1 and 2 September, demonstrations had been announced or planned in multiple Indonesian cities, prompting heightened security in Jakarta. In Batam, Li Chengxin (pseudonym), an industrial property agent with over two decades of experience, drove around the island to see whether the unrest had spread there. \u201cIt was very safe \u2013 everyone was busy making money,\u201d though he did notice some road closures. \u201cMaybe the government anticipated protests, but in the end, nothing happened.\u201d<\/p>\n
A source familiar with the matter said that a peaceful march had indeed been planned on Batam Island, but it was called off after President Prabowo personally intervened and urged its cancellation.<\/p>\n
Search for alternative markets<\/h2>\n
For multinational enterprises, what truly shapes long-term confidence is not just social unrest on the streets, but the uncertainty of international trade rules.<\/p>\n
On 8 August, Reuters reported that the US plans to tighten scrutiny of transshipped goods. According to a White House executive order, products found to have concealed their origin or been rerouted illegally will face an extra 40 per cent tariff \u2013 though what qualifies as \u201ctransshipment\u201d remains undefined.<\/p>\n
At present, US tariffs on Indonesian imports stand at 19 per cent, lower than the 30 per cent imposed on Chinese goods. An anonymous academic interviewed explained that many Chinese companies comply with Indonesian regulations by relocating key production processes to the country, thereby qualifying for \u201cMade in Indonesia\u201d status under rules of origin and avoiding the higher tariffs applied to Chinese exports.<\/p>\n
Gong Hao admitted that some Chinese firms overseas add minimal local processing to meet origin rules and cut tax burdens \u2013 in his words, \u201cit\u2019s basically about \u2018washing\u2019 the country of origin.\u201d He also conceded that, \u201cIf conditions allow, I\u2019d want to do the same.\u201d<\/p>\n
Although Gong is now focused on construction and renovation projects in Batam, he plans to build a solar panel factory that imports materials from China and exports finished products across South-east Asia \u2013 and possibly to the US. Washington\u2019s tariff policy, he said, remains a major concern.<\/p>\n
Stephen Olson, a former US international trade negotiator and a visiting senior fellow at the ISEAS-Yusof Ishak Institute, said the first Trump administration was frustrated by the ability of Chinese companies to circumvent punitive US tariffs by routing products through third countries. So, the president is determined not to allow that to happen again in his second term, and the \u201ctranshipment provisions are clearly directed, first and foremost, towards China\u201d.<\/p>\n
Olson also felt that increased Chinese investment into Batam and Bintan could be driven at least in part by a desire to escape punitive US tariffs on exports from China, but it\u2019s not necessarily the only or even the primary reason.<\/p>\n
Deborah Elms, head of trade policy at Hinrich Foundation, chose to view this through the broader lens of global supply chain restructuring. She said that Chinese firms, like most companies globally, have recognised the risks of footprints in only one country. \u201cCovid taught firms that diversification is important.\u201d<\/p>\n
Official statistics from China reflect this shift. According to the Ministry of Commerce, China\u2019s non-financial outbound direct investment reached US$143.85 billion in 2024, up 10.5 per cent year on year. Investment in Asean countries rose 12.6 per cent, mainly flowing into Singapore, Indonesia, and Thailand, with key sectors being leasing and business services, manufacturing, and wholesale and retail trade.<\/p>\n
Some foreign firms turn to Indonesia\u2019s domestic market<\/h2>\n
Gao Xiaoyu noted that many companies are now drawn to Indonesia\u2019s vast domestic demand, fuelled by its population of 270 million. \u201cAmong our clients, some no longer focus on exports \u2013 they are developing products directly for the Indonesian market,\u201d she said.<\/p>\n
Mark has the same view. He observed that consumer purchasing power across South-east Asia, particularly in Indonesia, is rising, making it \u201ca market with real potential\u201d for his business. As for the recent protests and clashes, he said he was not worried, viewing them instead as \u201can expression of public discontent with the central government compounded by police mishandling.\u201d<\/p>\n
\u201cA place where people have the right to take to the streets to fight for their interests,\u201d he said, \u201cis actually a safe place. It\u2019s where private property isn\u2019t protected \u2013 no matter how calm things look on the surface \u2013 that you feel truly insecure.\u201d<\/p>\n
For entrepreneurs like Mark, a sense of security comes from predictable rules, and their decision to stay or leave depends on whether costs remain manageable. Whether Batam and Bintan will become the next \u201cgold rush havens\u201d for Chinese enterprises remains to be seen. However, one thing is certain: capital has already arrived, and it won\u2019t wait.<\/p>\n
This article, translated by Bai Kelei, was first published on ThinkChina<\/a><\/em>, an English-language digital magazine under Lianhe Zaobao<\/em>.<\/p>\n<\/div>\n
<\/p>\nFriday, 8.30 am<\/p>\n
Asean Business<\/h5>\n
Business insights centering on South-east Asia’s fast-growing economies.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n
In the past, investors in Batam and Bintan mainly came from Singapore, Japan, Europe, and the US, with industries concentrated in electronics components, tourism, and resource processing. According to data from the Free Trade Zone (FTZ) authorities of both islands, Singapore has long been the largest source of foreign investment.<\/p>\n
In recent years, however, Chinese capital has surged into the area at an astonishing pace, standing out prominently amid what used to be a diversified landscape of foreign investors. Taking Batam for example, figures from its FTZ authority show that Chinese investment rose from US$17.32 million in 2022 to US$51.71 million in 2023, before rocketing to US$253 million in 2024, a nearly fifteen-fold increase over three years.<\/p>\n
When China\u2019s economy stalls: a contractor\u2019s escape to Batam<\/h2>\n
In March 2023, Mark made his first visit to an industrial park on Bintan Island. The park\u2019s infrastructure \u2013 roads, power supply, and water facilities \u2013 exceeded his expectations. More importantly, the factory site was only about an hour by ferry from Singapore\u2019s port, and import-export procedures were relatively straightforward. He immediately concluded that the location met his relocation needs, signed an agreement with the park four months later, and after nearly ten months of approvals and construction, the factory was successfully established.<\/p>\n
SEE ALSO<\/p>\n
Mark\u2019s case represents a proactive relocation by taking advantage of policy opportunities, whereas Gong Hao\u2019s journey overseas was one of necessity amid debt and hardship.<\/p>\n
Gong Hao had been a contractor for 15 years, taking on many government projects. But as China\u2019s economy slowed over the past few years, many payments were left in limbo. To finish the work, he borrowed heavily from relatives and friends \u2013 yet the government funds he was promised never arrived. Today, local authorities still owe him more than three million yuan (US$548,661).<\/p>\n
\u201cI tried every possible way to get them (the local government) to pay, but it was futile. The main contractors are owed even more \u2013 some in the hundreds of millions of RMB.\u201d Crushed by debt and with no way to recover his payments, he followed a friend to Batam Island to start anew, as many peers faced the same plight.<\/p>\n
Lower costs and abundant natural resources<\/h2>\n
According to Wijayanto Samirin, senior economics lecturer at Paramadina University in Jakarta and former adviser to Indonesia\u2019s vice-president, China\u2019s manufacturing sector has in recent years faced rising production costs and a complex geopolitical environment, making overseas diversification necessary. Indonesia\u2019s relatively low labour costs and abundant natural resources provide investors with a competitive edge, making the country an increasingly attractive destination.<\/p>\n
Wijayanto added that in the past, Chinese investment in Indonesia had focused primarily on natural resources and commodities. Now that China is expanding its manufacturing investments in Batam and Bintan, \u201cit is a positive shift.\u201d<\/p>\n
This trend is reflected in Indonesia\u2019s export data for July. According to Bloomberg, in the first half of 2025, Indonesia\u2019s top ten exporters of solar cells and solar panels shipped US$608 million worth of panels and cells to the US. Six of those companies are based in Batam, and investigations revealed that these firms were actually owned by senior executives of Chinese solar companies. Together, they accounted for nearly 70 per cent of Indonesia\u2019s related exports to the US.<\/p>\n
However, this surge of capital has not only shown up in robust industrial and trade activity \u2013 it has also stirred sensitivities involving land, communities, and the environment.<\/p>\n
Surge of investment stirs unease<\/h2>\n
In 2023, a \u201cgreen city\u201d project by China\u2019s Xinyi Glass on Rempang Island, adjacent to Batam, triggered fierce local opposition. The global glass and solar panel giant planned to invest US$11.6 billion to develop the project, which would require the relocation of about 7,500 residents.<\/p>\n
According to reports from Kompas and The Jakarta Globe, the project had been designated a national strategic project under former president Joko Widodo\u2019s administration, and the relocation process began at the end of 2023. However, local residents strongly opposed the government\u2019s resettlement plans, staging multiple protests and clashing with police.<\/p>\n
A similar dispute emerged on Bintan Island, where Bloomberg reported that a subsidiary of China\u2019s Nanshan Group planned to expand its industrial park in the island\u2019s southeast and on nearby Poto Island, building aluminium smelting, steel, and petrochemical facilities, along with a port. Resort operators and environmentalists opposed the plan, warning that construction could threaten coral reefs and disrupt the island\u2019s tourism ecosystem.<\/p>\n
Social turmoil puts Chinese investment plans on hold<\/h2>\n
While such land and environmental conflicts represent localised project risks, Indonesia\u2019s nationwide protests in late August 2025 expanded uncertainty to a broader scale. In Jakarta and other cities, widespread demonstrations erupted over lawmakers\u2019 high salaries and housing allowances. Heavy-handed police crackdowns quickly inflamed tensions, leading to casualties and triggering turmoil in financial markets.<\/p>\n
Although the wave of protests had nothing to do with foreign investors, Batam-based Gong Hao decided to suspend his company\u2019s operations at that time, instructing employees to stay home and avoid going out. \u201cYou can\u2019t rule out the possibility that some people, stirred by emotion, might turn their anger towards outsiders,\u201d he said.<\/p>\n
For Gong, such concerns were not unfounded. He had previously heard of clashes between Chinese-funded enterprises and local residents on Batam and Bintan, and he viewed this as a common potential risk for foreign investors operating in the region.<\/p>\n
Gao Xiaoyu, general manager of Yard Zeal Real Estate, a firm that assists Chinese companies in establishing operations in Indonesia, revealed that the demonstrations had already caused some clients to back out. \u201cMany of our clients are worried. Some have already cancelled or postponed their investments in Indonesia.\u201d<\/p>\n
She predicted that the uncertainty arising from social unrest would likely persist into the second half of the year, and that over the next few years, some Chinese enterprises may drop Indonesia from their list of preferred destinations for overseas expansion.<\/p>\n
However, industrial park operators and local intermediaries on the islands offered a different perspective on the recent unrest.<\/p>\n
Both Batam and Bintan remained calm<\/h2>\n
Edmund Lai, chief marketing officer at Gallant Venture, stressed that Batam and Bintan were unaffected by the protests. \u201cIf there had really been demonstrations, my clients would have called me immediately,\u201d he said firmly. \u201cI can assure you that both Batam and Bintan were calm at the time \u2013 everything was normal.\u201d<\/p>\n
Gallant Venture is a commercial and industrial property developer that operates one industrial zone each on Batam and Bintan, with many Chinese clients among its tenants.<\/p>\n
On 1 and 2 September, demonstrations had been announced or planned in multiple Indonesian cities, prompting heightened security in Jakarta. In Batam, Li Chengxin (pseudonym), an industrial property agent with over two decades of experience, drove around the island to see whether the unrest had spread there. \u201cIt was very safe \u2013 everyone was busy making money,\u201d though he did notice some road closures. \u201cMaybe the government anticipated protests, but in the end, nothing happened.\u201d<\/p>\n
A source familiar with the matter said that a peaceful march had indeed been planned on Batam Island, but it was called off after President Prabowo personally intervened and urged its cancellation.<\/p>\n
Search for alternative markets<\/h2>\n
For multinational enterprises, what truly shapes long-term confidence is not just social unrest on the streets, but the uncertainty of international trade rules.<\/p>\n
On 8 August, Reuters reported that the US plans to tighten scrutiny of transshipped goods. According to a White House executive order, products found to have concealed their origin or been rerouted illegally will face an extra 40 per cent tariff \u2013 though what qualifies as \u201ctransshipment\u201d remains undefined.<\/p>\n
At present, US tariffs on Indonesian imports stand at 19 per cent, lower than the 30 per cent imposed on Chinese goods. An anonymous academic interviewed explained that many Chinese companies comply with Indonesian regulations by relocating key production processes to the country, thereby qualifying for \u201cMade in Indonesia\u201d status under rules of origin and avoiding the higher tariffs applied to Chinese exports.<\/p>\n
Gong Hao admitted that some Chinese firms overseas add minimal local processing to meet origin rules and cut tax burdens \u2013 in his words, \u201cit\u2019s basically about \u2018washing\u2019 the country of origin.\u201d He also conceded that, \u201cIf conditions allow, I\u2019d want to do the same.\u201d<\/p>\n
Although Gong is now focused on construction and renovation projects in Batam, he plans to build a solar panel factory that imports materials from China and exports finished products across South-east Asia \u2013 and possibly to the US. Washington\u2019s tariff policy, he said, remains a major concern.<\/p>\n
Stephen Olson, a former US international trade negotiator and a visiting senior fellow at the ISEAS-Yusof Ishak Institute, said the first Trump administration was frustrated by the ability of Chinese companies to circumvent punitive US tariffs by routing products through third countries. So, the president is determined not to allow that to happen again in his second term, and the \u201ctranshipment provisions are clearly directed, first and foremost, towards China\u201d.<\/p>\n
Olson also felt that increased Chinese investment into Batam and Bintan could be driven at least in part by a desire to escape punitive US tariffs on exports from China, but it\u2019s not necessarily the only or even the primary reason.<\/p>\n
Deborah Elms, head of trade policy at Hinrich Foundation, chose to view this through the broader lens of global supply chain restructuring. She said that Chinese firms, like most companies globally, have recognised the risks of footprints in only one country. \u201cCovid taught firms that diversification is important.\u201d<\/p>\n
Official statistics from China reflect this shift. According to the Ministry of Commerce, China\u2019s non-financial outbound direct investment reached US$143.85 billion in 2024, up 10.5 per cent year on year. Investment in Asean countries rose 12.6 per cent, mainly flowing into Singapore, Indonesia, and Thailand, with key sectors being leasing and business services, manufacturing, and wholesale and retail trade.<\/p>\n
Some foreign firms turn to Indonesia\u2019s domestic market<\/h2>\n
Gao Xiaoyu noted that many companies are now drawn to Indonesia\u2019s vast domestic demand, fuelled by its population of 270 million. \u201cAmong our clients, some no longer focus on exports \u2013 they are developing products directly for the Indonesian market,\u201d she said.<\/p>\n
Mark has the same view. He observed that consumer purchasing power across South-east Asia, particularly in Indonesia, is rising, making it \u201ca market with real potential\u201d for his business. As for the recent protests and clashes, he said he was not worried, viewing them instead as \u201can expression of public discontent with the central government compounded by police mishandling.\u201d<\/p>\n
\u201cA place where people have the right to take to the streets to fight for their interests,\u201d he said, \u201cis actually a safe place. It\u2019s where private property isn\u2019t protected \u2013 no matter how calm things look on the surface \u2013 that you feel truly insecure.\u201d<\/p>\n
For entrepreneurs like Mark, a sense of security comes from predictable rules, and their decision to stay or leave depends on whether costs remain manageable. Whether Batam and Bintan will become the next \u201cgold rush havens\u201d for Chinese enterprises remains to be seen. However, one thing is certain: capital has already arrived, and it won\u2019t wait.<\/p>\n
This article, translated by Bai Kelei, was first published on ThinkChina<\/a><\/em>, an English-language digital magazine under Lianhe Zaobao<\/em>.<\/p>\n<\/div>\n