A Shift for Welson, Disney and Olaf
In the tropical heat of Batam, Indonesia, a bustling warehouse now produces Disney-themed toys. Items like Cinderella’s pumpkin popcorn holders, Olaf the snowman figurines, and characters from Monsters, Inc. are now being made there, a shift from China. In July, PT Welson Group Indonesia launched its first factory outside China, a move spurred by U.S. tariffs and rising costs in the mainland.
Andy Yao, the company’s general manager, explained the situation. “We had no choice but to diversify,” he said. Welson first looked at Malaysia, Thailand, and Vietnam, but eventually chose Batam. The island’s tax incentives, proximity to Singapore, and access to a young, motivated workforce made it ideal. After just three months of planning, Yao signed a lease and aims to double the workforce from 300 to 600 by 2026. The transition to Batam came after a period of intense evaluation and strategic planning, with Batam ultimately emerging as the best option due to its unique advantages.
Batam’s Edge: Tax-Free and Power-Ready
Batam is designated as a free trade zone, providing businesses significant benefits. Companies can import machinery and raw materials without taxes and export goods duty-free. These incentives open up new pathways for manufacturers seeking affordable options. Another standout feature is the power supply. Over 80% of electricity on Batam comes from natural gas, a cleaner and more reliable alternative to coal, which is prevalent in parts of Java. This energy mix gives the island a competitive edge. Also, unlike other parts of Indonesia, Batam is not located within the Pacific Ring of Fire, reducing the risk of natural disasters.
Batam is now attracting big names in business. Apple built an AirTag factory there, which now accounts for 70% of global production. Oracle and Nvidia are also investing in the region. Recently, Nvidia teamed up with Australian firm Firmus Technologies to construct a 360-megawatt data center. The island is becoming more than just a toy manufacturing hub—it’s drawing attention across different industries. These developments reflect a broader trend as companies expand beyond China into Southeast Asia, with Batam at the forefront of this shift.
Since the pandemic, Batam’s economy has outpaced the national average. In 2025, the island’s GDP reached 6.8%, compared to Indonesia’s 5.1%. In the first quarter of 2025, the gap continued, with Batam growing at 5.8% and the country at 5.6%. These impressive numbers have grabbed the attention of the government and investors alike. Batam's economic performance highlights its strategic importance as a regional manufacturing and investment hub, despite its relatively small size.
In June of last year, Indonesia opened a permanent investment office on Batam to streamline business operations. Recently, President Prabowo Subianto met with local leaders to discuss further plans, including the expansion of ports to boost shipping and cut costs. “Batam’s strongest marketing tool is the experience of companies already there,” said Mardika Parama, director at BowerGroupAsia Indonesia. When businesses benefit from setting up or sourcing through Batam, their success is shared. In global investment circles, such word spreads quickly and builds momentum.
The island, though just four times the size of Manhattan with a population of over 1.2 million, is now a focal point for global manufacturing. Its location 40 minutes by ferry from Singapore, ease of access for audits, and availability of a young, skilled labor force have made it an appealing alternative for businesses shifting away from China. These factors, combined with a clear government push, are helping Batam avoid the broader economic struggles facing Indonesia. Challenges like fiscal strain, a weak domestic currency, and corruption in government programs do not seem to affect the island as much.
Apple’s presence has solidified Batam’s manufacturing reputation, as its AirTag factory produces 70% of the company’s global supply. Oracle’s and Nvidia’s investments in cloud and data centers highlight the island’s versatility. Recent projects like Firmus Technologies’ 360-megawatt data center with Nvidia underscore that Batam is not just a short-term alternative but a long-term destination for major investments. This is supported by the government, which has taken concrete steps like opening an investment office and setting up new infrastructure to support the island’s growth.
The broader impact of these moves is visible in the island’s economic output. Between 2017 and 2025, Batam’s exports more than doubled, reaching $19.6 billion. These figures point to a region gaining global recognition and positioning itself at the forefront of a manufacturing renaissance that started with the U.S.-China trade war. While the initial push was driven by tariffs and rising costs, the continued success of Batam is due to its unique advantages, making it a compelling choice for companies looking to diversify their supply chains and invest in growth opportunities.
As more companies consider Batam, the island’s growth trajectory is expected to continue. The government’s commitment to improving infrastructure, especially in the logistics sector, will play a key role. Local leaders and national officials are working together to make the island’s ports more efficient, reducing shipping costs and enhancing export competitiveness. These efforts are part of a larger strategy to cement Batam’s role as a key player in the global manufacturing and technology landscape.
For now, Batam is proving that it can attract and retain top-tier businesses. From Disney-themed toys to high-tech data centers, the island is reshaping its identity and contributing to Indonesia’s economic stability. With more companies following Welson’s lead and the government actively supporting development, Batam looks set to continue its impressive growth and become a major global manufacturing hub in the years to come.