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 30, 2025

DBS Bank subsidiary Bank DBS Indonesia and United Overseas Bank subsidiary Bank UOB Indonesia disbursed a loan facility of Rp6.7 trillion to fund the construction of a new data center campus in Indonesia that is being developed by data center operator DayOne and Indonesian sovereign wealth fund Indonesia Investment Authority (INA).

DayOne Chief Executive Officer Jamie Khoo stated that the loan facility is a recognition of the company's ability to deliver digital infrastructure quickly on a large scale.

"This historic funding is the largest rupiah-denominated [loan] facility ever obtained for data center development," he said  on June 8, 2025.

The proceeds from said loan will be used to develop and operate three data centers in the Nongsa Digital Park Special Economic Zone (SEZ), Batam City, Riau Islands Province. Jamie said that the campus will be home to the most sophisticated data center in Indonesia that is ready to support artificial intelligence (AI) technology, and it is also designed to support the next wave of digital transformation.

This data center also aims to be a digital bridge between Singapore and Indonesia. Its development is expected to open access for Singaporean companies to Indonesia's digital infrastructure and human resources. At the same time, it allows Indonesia to benefit from technological advances and investment flows from the island city-state.

The construction of the data center is targeted for completion by the end of 2025 and will have a combined information technology (IT) load capacity of 72.4 megawatts (MW), which is equivalent to 5 percent of Southeast Asia's 1.41 gigawatt (GW) projected total data center capacity by 2029.

DayOne and INA have formed a joint venture to encourage the growth and development of the data center landscape in Indonesia.

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