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

January 12, 2025

Foreign Affairs Aceh Transition Committee (KPA Lua Nanggroe) Head Teuku Emi Syamsyumi, also known as Abu Salam, stated that Lion Group Management Services Sdn Bhd (Lion Group Malaysia) wants to invest in Aceh. The company is targeting four sectors, namely gold mining, oil and gas, marine and fisheries (including salt), and plantations (including wheat and corn).

Abu Salam revealed the information after a follow-up meeting with the Aceh Province Regional Development Planning Agency (Bappeda) and a delegation of investors to discuss investment plans in Banda Aceh City, Aceh on Jan. 7, 2025. On the same occasion, Lion Group Malaysia Chairman Tan Sri William Cheng said that the investment plan was to be carried out in the long term, by 10 years at the soonest or when the project has passed one cycle of its payback period.

He added that the availability of sufficient resources and infrastructure support is needed to achieve that projection, including a minimum area of ​​5,000 hectares of land and clear land status, road and transportation access, the availability of cheap energy, as well as ease in managing permits. Lion Group Malaysia promised to comply with the provisions for paying taxes, royalties, and also the use of local labor. He hopes that this investment can benefit both investors and Aceh.

The meeting also presented the heads of the relevant Aceh Provincial Government Work Units (SKPA), namely the provincial government offices of Energy and Mineral Resources (ESDM), Agriculture and Plantation, Investment and One-Stop Integrated Services (DPMPTSP), Marine and Fisheries, as well as the Aceh Provincial Government Regional Secretariat's Economic Bureau.

Aceh Bappeda Head Ahmad Dadek directly led the hybrid offline and online meeting. In his remarks, Dadek welcomed the investors and asked the heads of Aceh SKPA to provide clearer information about Aceh's investment potential and to provide convenience for investors to raise their interest in investing towards Aceh.

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