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

March 19, 2025

The Industry Ministry stated that Apple Inc. is committed to increasing investment to satisfy the Indonesian government's sanction on the United States (US) technology company due to not carrying out the commitment to fulfilling the local content requiremnt (TKDN) in the previous period.

Industry Minister Agus Gumiwang Kartasasmita stated that the fulfillment of the sanctions was carried out by having Luxshare Precision Industry Co. Ltd. (Luxshare-ICT), a Chinese tech company and Apple supplier, to invest in Indonesia.

"Luxshare-ICT's investment in Indonesia is at Apple's request to fulfill the obligation of its sanction as regulated in Permenperin (Industry Minister Regulation) No 29/2017 on TKDN for Cellular Phones, Handheld Computers, and Tablet Computers," he explained on Feb. 26, 2025.

Previously, Agus  stated that Indonesia had completed negotiations with Apple regarding the extension of TKDN certification.

"With the completion of negotiations between the Industry Ministry  and Apple which have been stated in the MoU (memorandum of understanding) document, the process of issuing TKDN certificates for Apple can begin," said Agus. The negotiation process lasted for 5 months and was tough, he said, because both parties defended their interests.

Luxshare-ICT will invest to produce Apple's AirTag accessory in a factory currently being built in Batam City, Riau Islands Province with an investment of US$150 million (Rp2.4 trillion at Rp16,370 per US$1). The investment would make Indonesia a supply 65 percent of the world's AirTags. Apple is committed for AirTag battery components to be supplied by domestic manufacturers.

In addition, Apple is preparing a production line at Longjohn Group subsidiary PT Long Harmony Industry in West Bandung Regency, East Java Province, which will make mesh fabric for AirPod Max. Hence, making Long Harmony part of Apple's global value chain.

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