The main reason why the business environment in Batam has weakened according to Korean companies is the higher minimum wage, implying declining profit figures. In recent years, the minimum wage has risen considerably. In 2013, Batam's monthly minimum wage was raised from IDR 1.40 million (USD $122.8) to IDR 2.04 (USD $178.9), a 44 percent increase. But despite this increase, the local minimum wage is still relatively low compared to Singapore or even Malaysia. However, labour protests are a constant risk. Between January and March 2014, there have been 40 labour protests triggered by wage disputes and layoffs.

Currently, 23 Korean companies are still in operation in Batam. Batam is considered an interesting investment destination due to its proximity to Singapore as well as its strategic position on trading routes that cover Australia, Asia, Europe and the Middle East. Being close to Singapore - and with lower labour costs - Batam is interesting for Singapore-based manufacturing companies. Approximately half of Batam's export is directed to Singapore and roughly 70 percent of foreign direct investment (FDI) in Batam originates from Singapore. As such, Batam is in a position to benefit from Singapore's economic expansion.

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Special Economic Zone of Batam Losing Appeal to Foreign Investors