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

September 11, 2024

The Wiraraja Green Renewable Energy and Smart-Eco Industrial Park national strategic project (PSN) was launched in a grand ceremony on Aug. 26, 2024 at Wiraraja Industrial Estate in Nongsa District, Batam City, Riau Islands Province.

The ceremony was led by Muhammad Rudi, Chairman of the Batam Indonesia Free Trade and Free Port Zone Authority (BP Batam), alongside Coordinating Economic Minister Airlangga Hartarto.

As stipulated by Decree of the Committee for Acceleration of Priority Infrastructure (KPPIP) No. 48/D.VI.M.EKON.KPPIP/05/2024 and IPW/48/D.VI.M.EKON.KPPIP/04/2023, Galang Bumi Industri is responsible for managing the Wiraraja Green Renewable Energy and Smart-Eco Industrial Park, while Marubeni Global Indonesia will manage the Wiraraja renewable energy project.

The two companies oversee the Wiraraja Industrial Estate on Galang Island in Galang District, Batam City, Riau Islands Province which covers 6,800 hectares and expects a projected investment of US$17.6 billion over the next five years. It is also estimated to create 36,000 new jobs.

"At the [Group of Twenty] forum, Indonesia's economic growth ranks in the top five at 5 percent, meaning that globally, this momentum must be maintained and improved continuously," Airlangga said in his remarks during the launch ceremony.

Airlangga also expressed appreciation for BP Batam in enhancing investment and easing business licensing to allow the region to continue its growth as the economic center of the Riau Islands.

"We all know that industrial development in Batam grows evenly and comprehensively with no single type of industry dominating, ranging from heavy industries to service industries, spread across 31 industrial zones and several special economic zones [SEZs]," the senior minister said.

"Through this investment, I hope industries in Batam and surrounding islands will continue to develop, and that Batam can become the epicenter of economic growth and the gateway for investment in Riau Islands province," he said.

The launch ceremony was also attended by the Secretary Susiwijono Moegiarso from the Office of the Coordinating Economic Minister, United States Consul General for Sumatra Bernard C. Uadan, Singapore Consul-General in Batam Gavin Ang and Riau Islands Governor Ansar Ahmad.

Members of the Riau Islands Regional Leadership Coordination Forum (Forkopimda) also took part in the inauguration event by signing a plaque that lists the eight companies establishing their presence in Wiraraja Industrial Estate.

BP Batam’s Muhammad Rudi declared his commitment to providing various investment facilities to ease doing business in the region.

"As an effort to maintain a conducive investment climate in Batam, we will always [continue to] support all forms of positive investment entering this area," he said.

"Hopefully with the growth of investment in Batam, the economy and welfare of the people of Batam can continue to improve, and together we can enjoy Batam as a new city for all of us."

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