Province

Riau Island

Overview Economy

Riau Islands, a gateway in the Malacca Strait

Situated in the northern region of Indonesia, near the meeting point of Malaysia and Singapore, is the province of Riau Islands. Among the youngest provinces in Indonesia, it was formally introduced as a separate province from Riau in 2002, becoming the 32nd province in the country. Made up of more than 3.000 islands, the province offers a blend of cultural diversity, ecological beauty, and economic vitality.

With a population of 2.18 million people residing in the Riau Islands as of 2023, the province is home to several ethnic groups, such as the Malays, Bugis, and Chinese, whose customs are woven together to create the province’s cultural tapestry.

A variety of ecosystems fill the Riau Islands, including beaches, mangrove forests, and coral reefs. Notably, Bintan Island, within the province, is a popular vacation spot known for its scenery and historical monuments. As the Riau Islands attract tourists, the province is committed to eco-friendly and responsible tourism, aligning with efforts to protect its natural treasures.

The capital of Riau Islands, Batam, is distinguished by its combination of modern urban life with the natural environment. The city achieves this through its contemporary architectural style, which caters to commercial interests in the port sector without sacrificing the allure of the tropical shoreline.

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Economic uniqueness

The Riau Islands have recorded a positive trend in their Gross Regional Domestic Product (GRDP), reaching Rp 180 trillion in 2021 and increasing to Rp 190 trillion in 2022, and Rp 200 trillion in 2023. In 2023, the processing industry sector made the largest contribution to the GRDP at Rp 81 trillion, followed by the construction sector with Rp 38 trillion, and the trade sector with Rp 16 trillion.

Subsequently, the province has emerged as a major economic force, capitalizing on its advantageous location near crucial international shipping lanes. Batam, the provincial capital, has drawn investments in electronics, shipbuilding, and manufacturing, transforming itself into an industrial and economic center. The province's standing as a major player in the regional economy is further solidified through its participation in the Batam-Malaysia-Singapore Growth Triangle.

Strategically fostering economic activity, the province has established free trade zones, such as the Batam Free Trade Zone, which has been essential in promoting economic activity and international direct investment. This has made the Riau Islands an appealing location for both domestic and international firms, offering investment incentives such as tax cuts and streamlined bureaucratic procedures.

As an archipelagic province, the Riau Islands' economic activity is intricately linked to maritime connectivity. The province facilitates trade and transportation between Indonesia, Malaysia, and Singapore by acting as a marine gateway. Subsequently, ports and harbors are seeing ongoing infrastructure enhancements to improve maritime connections, facilitate commercial operations, and attract additional investment.

Moreover, the Riau Islands have shown a positive trend in economic development over the past three years, with year-over-year (YoY) growth rates of around 3.43 percent in 2021, 5.09 percent in 2022, and 5.20 percent in 2023. A key element supporting this growth, especially in the aftermath of the COVID-19 pandemic, is the increased number of international visitors to the province, with figures reaching 758,154 visitors in 2022 and 1.5 million visitors in 2023.

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Latest News

June 4, 2025

The growth of the data center industry in Batam City, Riau Islands Province is in an upward trend, reaching hundreds of billions in rupiah according to the Investment Coordinating Board (BKPM).

"Indonesia has not only set a new record in digital investment, but has also strengthened its position as a gateway to digital infrastructure in Southeast Asia," stated Investment and Downstream Ministry/BKPM Macroeconomics Expert Staff Imam Soejoedi while speaking during the Schneider Electric Innovation Day Batam 2025 event at the JW Marriot Harbour Bay Hotel in Batam City, Riau Islands on Apr. 23, 2025.

Realized investments to Riau Islands reached Rp35.36 trillion in 2024, with Batam City contributing Rp25.47 trillion.

"For the data center and telecommunications industry in Batam, investment for the 2023-2024 period was recorded at Rp446.78 billion, dominated by foreign investments from Singapore, Hong Kong, America, Malaysia, and India," he added.

Imam said that the realized investments for data center and telecommunications is a strong signal from investors that they continue to place great trust in the national investment climate.

"The central and regional governments are also trying to support ease of investment for data center industry players," he said.

At the same occasion, Batam Free Trade and Free Port Zone Authority (BP Batam) Free Trade Zone, Free Port Zone, and Special Economic Zone Development Center Head Irfan Widyasa explained that there are plans for 18 data centers to operate in Batam City soon.

"There are nine data centers [currently] operating in the Nongsa Digital Park SEZ. Later, there will be four more. Meanwhile, there are five data centers outside the Nongsa SEZ," he said.

Separately, Schneider Electric Indonesia & Timor Leste President Director Martin Setiawan stated that digitalization has now become the main foundation for resilient and adaptive industrial growth.

"Indonesia's digital economy is projected to reach US$130 billion by 2025, reflecting its huge domestic potential. At the regional level, Indonesia contributes around 40 percent of the total digital economy in Southeast Asia," he explained.

Martin highlighted the importance of cross-sector collaboration in driving digital adoption.

"Digital transformation must be realized in the form of practical solutions that are relevant to industry needs," he said.

Through Innovation Day, Schneider sought to present a platform that showcases several cutting-edge technologies and encourages dialogue and collaboration to accelerate strategic adoption of technology.

"Schneider Electric continues to be committed to supporting industry players in achieving measurable, competitive, and sustainable growth," he concluded.

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