SINGAPORE: Singapore’s neighbours, Malaysia and Indonesia, are well placed to benefit from the economic momentum the city-state is currently enjoying. We previously explored how the Singapore–Johor SEZ, touted as the next Shenzhen, is reshaping growth dynamics across the region. Now, Indonesia’s Batam island is stepping forward, positioning itself as a digital hub within the Riau Archipelago.
A video posted over the weekend from CNA showed how the island of Batam, once known primarily for manufacturing, is well-positioned to be the next digital powerhouse of Indonesia. The report said that in 2025, data centre investment had been as high as 11.4 trillion rupiah (S$867 billion), with the information and communications sector responsible for more than 4 per cent of Batam’s economy, largely due to the rapid growth in the data centre industry. However, Batam faces two substantial challenges: a talent crunch and the factors limiting land use.
Batam and Singapore
Located just 20 kilometres, or a short ferry ride, from Singapore, the island city of Batam is separated from the city state just by the Singapore Strait. With a population of less than 1.3 million, Batam is a Free Trade Zone and is a regional economic triangle with Singapore and Malaysia.
By design, Batam was always meant to be an “Indonesian version of Singapore” or “Singapore’s affordable twin.”
Indonesia’s high ambitions for Batam were more recently expressed by former President Joko Widodo, who said a few years ago that he wanted to turn the island’s Nongsa Digital Park, which was launched in partnership with the Singapore Economic Development Board (EDB), into a digital bridge between Singapore and Indonesia.
Over the last decade, Batam has been stepping away from its roots as a factory hub with the move from low-cost manufacturing to high-value digital services. Its transformation has been led by data centres, cloud infrastructure, startups, e-commerce, and logistics, as well as the creative aspect of the digital economy, such as game development, animation, and content creation.
Central to Batam’s ambitions is Nongsa Digital Park, which has partnerships with such tech giants as Apple and IBM, as well as certain universities. The park includes Apple Developer Academy for talent training and was meant to supply tens of thousands of digital workers.
However, the park’s chief operating officer, Khoo Peck Khoon, told CNA that even if the park has ambitions to grow further, “we are limited by the amount of land we have,” while protecting the environment.
The report also pointed to the mismatch between the existing workforce and the needs of the industry, giving rise to the need for more targeted programs that would supply needed workers. Additionally, a report in batambisnis.com said last July, many skilled workers have opted to move to Singapore or Japan, and businesses face the challenge of retaining talent.
Singapore is Batam’s largest foreign investor, with nearly 70 per cent of foreign direct investment last year coming from the city-state. Therefore, Batam’s success is in Singapore’s best interests, as many companies have the option of keeping their headquarters in Singapore but keeping the production and tech operations teams in Batam. /TISG
