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

November 6, 2024

The Aceh Vocational College Consortium (PTV), currently chaired by the Lhokseumawe State Polytechnic (PNL), initiated the formation of the Aceh Industrial and Vocational Network (JIVok). JIVok Aceh is expected to build a strong connection between vocational education institutions and Aceh's industrial sector.

The founding of JIVoK Aceh was carried out in conjunction with the Policy Public Dialogue with Regional Stakeholders on the JIVok Aceh Formation Plan, which took place on Nov. 1 to 2, 2024, at the Rasamala Hotel in Banda Aceh City, Aceh Province.

At the occasion, a memorandum of understanding (MoU) was signed by the Aceh PTV Consortium, chambers of commerce for Aceh's eight regencies and cities, as well as six private companies for a joint commitment to advancing vocational education in Aceh.

JIVok itself is an integrative platform that connects universities, vocational schools, courses and training institutions, the industry, and the government to create an adaptive and relevant vocational education ecosystem. JIVok will serve as a liaison, facilitator, and driver of innovation in the field of vocational education to improve the quality of graduates, develop curriculum based on industry needs, and increase research and development collaboration .

2024 Partnership Facilitation Program Head and PNL Planning, Cooperation, and Information Systems Deputy Director Muhammad Arifai stated that JIVok is a milestone in strengthening collaboration between vocational education and Indonesia's industrial sector.

"JIVok Aceh is a crucial step in overcoming the mismatch between the quality of vocational education and the demands of the ever-changing industry. The realization of this network allows us to create an ecosystem that supports synergystic collaboration where both parties can support each other in developing relevant competencies and skills," he said.

Arifai added that JIVok Aceh emerged amid the complex employment challenges at present, which is marked by rampant layoffs and many bankruptcies affecting major industries. The condition is further exacerbated by the relative rise of poverty and unemployment rates. On the other hand, the existence of a strong industry is very important as a supporting ecosystem for vocational education to ensure the sustainability of employment and regional economic stability.

"We hope that JIVok Aceh could bridge the problems we are currently facing by producing a workforce that is not only ready for employment, but also able to provide real contributions to economic growth and the continued progress of the Acehnese people," he explained.

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