Province

Aceh

Overview Economy

Aceh, an Islamic province

Situated on the northern end of Sumatra Island, Aceh province is one of the first regions in Southeast Asia to Islam. It is also recognized as the only region in Indonesia where the criminal justice system enforces Islamic law for both Muslims and non-Muslims.

Aceh is committed to religious conservatism, making it the only Indonesian province implementing Sharia law. This strict adherence traces back to its early embrace of Islam. The enforcement of Sharia Law prompted the Indonesian government to grant Aceh a special autonomous status. However, this special status was, in part, a measure to appease the Free Aceh Movement (GAM), a group involved in a nearly three-decade-long insurgency to achieve independence.

In addition to being granted special autonomy status, Aceh has established its local political party, officially recognized and registered by the Indonesian government. This recognition has allowed them to take part in the 2024 election.

Due to Aceh’s geographical location being bordered by the Indian Ocean to the north and west, and the Strait of Malacca to the east, the province is prone to natural disasters.

In December 2004, the western coastal areas of Aceh, including cities such as Banda Aceh, Calang, and Meulaboh, bore the brunt of the tsunami resulting from the 9.3 magnitude Indian Ocean earthquake. Although figures may differ, the tsunami in Aceh claimed the lives of more than 170,000 individuals, leaving approximately 500,000 people without homes.

The occurrence of the 2004 tsunami in Aceh is viewed as a period of tranquillity for both the Free Aceh Movement (GAM) and the Indonesian government. Subsequently, the conflict was formally concluded through the signing of a peace agreement in Helsinki, Finland.

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Aceh’s economy, leading sectors

According to Statistics Indonesia, Aceh’s Gross Domestic Product (GDP) reached Rp 36.6 trillion as of the third quarter of 2023. Alongside this economic growth, the region is home to a population of 5.4 million people, spanning an area of 56 thousand square kilometers and encompassing a total of 23 regencies and cities.

Previously, Aceh boasted substantial reserves of oil and natural gas, a sector that played a crucial role in propelling the province's economy. By 2023, this significance has waned, marking a shift in the economic landscape. Now, the leading sectors in the province are agriculture, fishery, and transportation.

Furthermore, investment in Aceh holds immense potential, driven by its strategic geographical advantage in the marine and fisheries sector. As of the third quarter (Q3) of 2023, this sector contributed 27 percent to the Gross Regional Domestic Product (GRDP), amounting to Rp 9.87 trillion. With primary commodities such as palm oil and coffee, Aceh’s agricultural sector also beckons investors to explore the 299,701 hectares of available land for business ventures.

Adding to its appeal is Aceh's location bordering the Malacca Strait, a key international waterway linking the Indian Ocean and the Pacific Ocean. The government's substantial investment in upgrading transportation infrastructure for sea, air, and land routes further enhances the region's attractiveness. In Q3 2023, the transportation sector accounted for 7 percent of the GRDP, totaling Rp 2.46 trillion.

Ultimately, Aceh stands as a promising investment destination, leveraging its unique geographical advantages to foster growth in the marine, fisheries, and agricultural sectors. The province's commitment to enhancing transportation infrastructure not only increases its appeal but also creates opportunities for investors.

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Latest News

March 24, 2025

Aceh Governor Muzakkir Manaf and Deputy Governor Fadhlullah received a visit from the Ambassador of the United Arab Emirates (UAE) to Indonesia Abdulla Salem Al Dhaheri and Mubadala Energy President Director for Indonesia Abdulla Bu Ali. The visit aims to discuss investment opportunities in Aceh, especially in the tourism, agricultural, energy, infrastructure, and special economic zone (SEZ) sectors.

"The Aceh region is supported by a strategic geographical location in international trade and supported by good resources, of course if managed this will provide benefits," said Muzakir when receiving a visit from UAE representatives at the Aceh Governor's Office on Mar. 10, 2025.

Mubadala Energy is a subsidiary of UAE-based Mubadala Investment Company PJSC that does business in the oil and gas industry.

"We know that investments to Aceh from both domestic and foreign investors has continued to increase. In addition, Aceh  has the best gas potential in Sumatra, with several active working blocks and exploration opportunities in a number of its regions," Muzakir explained.

In his presentation, Muzakir conveyed potential investments in Aceh, including infrastructure in the Arun Lhokseumawe SEZ that supports chemical energy, such as blue and green ammonia produced from a combination of nitrogen with blue or green hydrogen, respectively. The Aceh Government offers various incentives for investments, including tax allowances and the provision of the Arun SEZ and the Sabang Free Trade and Free Port Zone Management Agency (BPKS).

On the same occasion, PT Pembangunan Aceh (Perseroda), or PT PEMA, President Director Mawardi Nur welcomed the visit by the UAAE Ambassador to Indonesia and Mubadala Energy.

"As one of Aceh's regional government-owned enterprises, PT PEMA plays a role in encouraging development, economic [growth], and increasing Aceh's locally-generated revenue (PAA). PT PEMA is ready to Foster synergy with all stakeholders. both from in and out of the country," he added.

PT PEMA is currently focused not only on the oil and gas sector, but it has also developed various other strategic sectors, such as agribusinesses which include coffee plantations, fisheries, palm shell exports, as well as ventures in the service and trade sectors.

The visit is expected to help establish closer partnership between Aceh and global investors to increase economic growth and the welfare of the Acehnese people.

The meeting was also attended by the Regional Assistant, SKPA, BUMD, BPMA, and other ranks of the Aceh Government.

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