Nongsa Digital Park: Why is it Important for Singaporean Investors?

Nongsa Digital Park: Why is it Important for Singaporean Investors?

  • InCorp Editorial Team
  • 16 May 2023
  • 5 minute reading time

The Significance of Indonesia’s Digital Economy

Indonesia’s economy has been steadily growing with time, with the internet economy has also been seeing a similar trend. It is expected to reach USD 330 billion by 2030, which is almost double the current value of the Southeast Asian digital economy, valued at USD 170 billion.

The reason underlying such growth is seen in the e-commerce sector coupled with the open regulatory framework, which is specifically designed to support digital financial services. A large portion of this growth can be attributed to the pandemic, which has largely contributed to the rise in the usage of digital services. According to the “Roaring 20s: The SEA Digital Decade” report, there have been 21 million new digital consumers in Indonesia. 72% of the aforementioned number are from non-metropolitan areas. Indonesia has even been awarded the title of being the hottest investment destination in the region, surpassing other countries like Singapore and Malaysia, indicating that a new era of the digital economy is to come.

Nongsa Digital Park: A Government-to-Government Collaboration

The Singaporean and Indonesian government has joined forces to form bilateral cooperation that encourages the development of the digital industry in Batam by launching the Nongsa Digital Town or better known as the Nongsa D-Town. Digital technology has tremendously helped both governments and the private sectors streamline complex business processes. It also promotes a practical and flexible work environment, especially during the pandemic.

Batam has a geo-strategic advantage due to its proximity to Singapore and is therefore expected to serve as a digital bridge that connects Singapore to other parts of Indonesia that are still developing. The Indonesian Coordinating Minister for Economic Affairs, Airlangga Hartarto is optimistic that the Nongsa D-Town will become an essential milestone for the development of the digital industry and will also help increase cooperation between Indonesia and Singapore. Singapore’s Minister for Trade and Industry, Mr. Chan Chun Sing also shares similar views as those expressed by Airlangga. He mentions that by working together, Singapore and Indonesia can achieve greatness as the Nongsa Digital Park marks the next phase of the digital economy. This is a clear attempt by both Indonesia and Singapore to build a project that is mutually beneficial between the public and private sectors of the two countries.

How Nongsa Digital Park Attracts Singaporean Investors

Before the Nongsa Digital Park, Batam was already a preferred destination for Singaporeans due to its close proximity. Following its opening, the Nongsa Digital Park has become a central zone for investments and is even considered one of the most attractive opportunities in Batam, which is a magnet for investment due to its Free Trade Zone status. The newly established digital park, which involves tech-friendly infrastructure including independent power stations, data centers, and a broadband connection, makes it an even more attractive site for those looking to enjoy the newest innovation.

It is well known that Singapore’s information and communication technology sector is currently flourishing. However, the continued growth is dependent on access to larger markets and technology as well as the supply and availability of talent. This collaboration would open great opportunities for Singapore companies to expand their reach and increase their value. In addition to this, the growing demand for the internet by Indonesians and the competitive telecommunications industry also further attract Singaporean investors.

The Benefits of Setting Up A Business in Nongsa Digital Park for Singaporean Investors

The Nongsa Digital Park is located in a prime spot in Indonesia. It is centered in a market that is currently moving in full swing and is competitive.

Batam, in particular, has an untapped pool of talented workforce that is eager to make a change. Singaporean investors may also benefit from investing in the newly established park due to the sheer efficiency caused by the short distance. They are making it easy to set up and oversee a new business.

Aside from this, Batam is also located relatively close to Singapore and is accessible by a 45-minute ferry ride. The time difference between the two provides an ease to work across the borders, posing little to no trouble for investors communicating with offshore talent. Despite having a high labor supply, India and Vietnam are both geographically located far away from Singapore. Therefore, setting up a business in Nongsa Digital Park would save costs and overheads.

Nongsa Digital Park also comes with several resources, including an international data center, a start-up incubator, and numerous lodging options, which makes it an offshoring haven for those looking to explore this opportunity. Setting up a business in Nongsa Digital Park and capitalizing on the aforementioned factors would give Singaporean investors an advantage and a higher chance of success. For foreigners looking to do so, InCorp offers services that would help with the registration and licensing process that would help ease the process.

Pandu Biasramadhan

Senior Consulting Manager at InCorp Indonesia

An expert for more than 10 years, Pandu Biasramadhan, has an extensive background in providing top-quality and comprehensive business solutions for enterprises in Indonesia and managing regional partnership channels across Southeast Asia.

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Frequent Asked Questions

There are two main types, namely, primary business licenses and non-primary business licenses. The primary ones commonly apply to various industries, such as general and industrial business licenses. Additional non-primary ones are included, depending on the operations of your business. Examples of non-primary business licenses are operational and commercial licenses.

Yes, you must apply for it to be able to issue work permits for your foreign employees. This permanent business license is also a prerequisite for the applications for other business licenses and import licenses.

As their names suggest, the main differences between the three business kinds in Indonesia lie in the businesses and the purpose of their incorporation. Local company owners (PT) must be Indonesian citizens, as even 1 percent of foreign ownership is not allowed. This type of company is not limited to entering any business field, and restrictions on incorporation are not so tight. On the contrary, a foreign-owned company (PT PMA) is open to international investors, but the maximal percentage of foreign shares differs in various business sectors. Contact InCorp to get the most updated information on the Negative Investment List. International investors tend to open representative offices as a first step to understanding the Indonesian market before setting up a limited liability company. This type is used for marketing and promotion activities and needs the right to sell directly and receive income.

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It should take between 30 to 45 days.