The Current State of Legal Governance in the Batam Free Trade Zone: Opportunities for Improvement

Heru Iskhan, I. Gusti Ayu Ketut R.h and Hartiwiningsih
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Heru Iskhan: Faculty of Law, Sebelas Maret University, Indonesia.
I. Gusti Ayu Ketut R.h: Faculty of Law, Sebelas Maret University, Indonesia.
Hartiwiningsih: Faculty of Law, Sebelas Maret University, Indonesia.

International Journal of Research and Innovation in Social Science, 2025, vol. 9, issue 5, 454-468

Abstract: This paper investigates the legal governance landscape in the Batam Free Trade Zone (FTZ-Batam) in Indonesia, highlighting key opportunities for improvement. The study uses a qualitative research method that describes how governance has changed, points out conflicting regulations, and shows problems caused by divided administration. The proposed framework aims to encourage increased integration and harmonization of regulations across various government institutions and sectors. This examination is crucial, not only for policymakers involved in the management of Free Trade Zones (FTZ), but also for stakeholders investing in the broader implications of free trade zones on local and national economic growth. The Batam Free Trade Zone (FTZ-Batam) is one of the strategic economic zones that plays an important role in the development of foreign investment in Indonesia, serving as a longstanding pillar for both regional and national economic growth. In this context, this paper aims to look closely at the legal rules that apply in the area, especially focusing on Government Regulation (PP) No. 4 of 2025, signed on January 22, 2025, which is the third update to Government Regulation No. 46/2007 about the Free Trade Zone and Free Port of Batam Island. In addition, this paper also analyzes how historical legal and regulatory developments have influenced governance dynamics in the Batam Free Trade Zone. This discussion will explore the relationship between institutional and administrative aspects that have undergone significant shifts in efforts to support investment processes and economic growth. The final result of this research recommends the need for enhanced synergy between central and regional authorities as well as the active role of stakeholders in addressing institutional issues that arise along with the development of the Free Trade Zone and Free Port Area.

Date: 2025
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