Province

South Sumatra

Overview Economy

South Sumatra, the province divided by Musi river

Sumatra Island’s eastern coast is home to South Sumatra, a province of 8.89 million people as of 2023. The province’s capital city is Palembang, a city that serves as a blend of modernity and tradition, thereby contributing to South Sumatra’s presence as a cultural melting pot where traditions and customs rooted in Java, Palembang, and Malay culture exert a significant influence. Additionally, the province’s local cuisine reflects this diversity, featuring spicy and savory meals as staples.

Furthermore, a highlight of South Sumatra's cultural legacy is the annual Sriwijaya Festival, which honors the historical Sriwijaya Kingdom that once flourished in the area. The festival showcases the province’s rich cultural diversity through traditional performances, art exhibitions, and gastronomic events.

With a varied terrain that includes mountains, forests, and plains, South Sumatra’s natural landscape notably is cut by numerous rivers, among them the Musi River, which plays an essential role in the region’s agricultural and transportation networks. Particularly, the Ampera Bridge spans the Musi River, further contributing to the region’s connectivity and infrastructure.

Moreover, South Sumatra’s vast landscape supports a wide variety of plants and animals. These include the critically endangered Sumatran tiger and rhinoceros, housed in the UNESCO World Heritage site of Bukit Barisan Selatan National along with a variety of other animals.

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Economic landscape

South Sumatra’s economy, as of 2023, is reflected in a Gross Regional Domestic Product (GRDP) of Rp 360 trillion. Driving this GRDP are several sectors, with the mining sector leading with a contribution of 26.61 percent, followed by the processing industry sector, and the agriculture, forestry, and fishery sector.

Moreover, the province contributes significantly to the country's palm oil industry due to its vast plantations. Additionally, natural resources such as coal and rubber contribute significantly to both the national and local economies.

In 2023, South Sumatra province attracted Rp 36.80 trillion in investment up to the third quarter of the year. During this period, both domestic and foreign investments were nearly identical, with Rp 18.67 trillion and Rp 18.12 trillion, respectively. Among international sources of investment, Singaporean businesses led the way with Rp 12.19 trillion, followed by China at Rp 2.63 trillion, Hongkong at Rp 1.67 trillion, Japan at Rp 665 billion, and Malaysia at Rp 319 billion.

Five major sectors enjoyed investment in South Sumatra during that period, namely the paper and printing industry with Rp 10.81 trillion in investments, the mining industry at Rp 5.61 trillion, the energy industry at Rp 4.67 trillion, the food industry at Rp 3.43 trillion, and the transportation, warehousing, and telecommunication industry at Rp 3.04 trillion.

To sustain the flow of investment into the province, South Sumatra is supported by the Trans-Sumatra Highway, connecting the province to Lampung. Notably, the Palembang-Lampung route reduces travel time from 10-12 hours to only 3.5 hours. Significant investments have been made in this highway, including the Indralaya-Pramubulih route, which received an investment of Rp 12.5 trillion.

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Latest News

April 15, 2025

PT Kereta Api Indonesia (Persero) or PT KAI ordered 54 new CC 205 locomotives worth Rp3.56 trillion from Alabama, the United States (US) to improve coal freight services in the provinces of South Sumatra and Lampung.

PT KAI Public Relations Vice President Anne Purba stated that the investment is not just to update the rail state-owned enterprise (SOE)'s rolling stock, but also real contribution to national energy security and the sustainability of reliable rail-based logistics services.

"Most of the coal transported by KAI is used for CFPP (coal-fired power plant) fuel that lights up homes, offices, as well as the small and medium [enterprise (SME)] industries in Java and Bali. The core of our investments is to provide great benefits to the public at large," she explained in a press release on Apr. 15, 2025.

Currently, the first batch of 12 locomotives is in the process of being shipped to Indonesia and is scheduled to start operating by early July 2025. Before entering operation, all locomotives will undergo a series of comprehensive tests to ensure optimal performance and maximum safety in the field.

On the same occasion, Anne revealed that PT KAI recorded coal transported by the SOE's freight train rising by 5.28 percent year-on-year (yoy) to nearly 4.45 tons in March 2025.

"In the first three months of this year alone, we have transported 13.29 million tons of coal. This is proof that trains remain an efficient, reliable, and essential mode of logistics in maintaining the supply of energy materials," she noted.

The volume of coal represents 82.75 percent of KAI's total freight transport during the first quarter (Q1) of 2025, with the as of yet unaudited number reaching 16.07 tons. The majority of coal transportation was carried out in the PT KAI Regional Division III Palembang and Regional Division IV Tanjungkarang, two crucial areas in the national coal supply chain, using CC 205 locomotives.

Anne emphasized that PT KAI's role is increasingly relevant in today's digital era, where people's activities depend on a stable electricity supply.

"The Work From Anywhere (WFA) policy in various companies, [WFA] lectures, and the growth of digital MSMEs (micro, small, and medium enterprises) have increased people's dependence on electricity and the internet. This is where KAI's reliability in coal distribution plays a central role that is rarely seen, but is very crucial," she elaborated.

With an efficient and environmentally friendly rail-based logistics approach, Anne highlighted how PT KAI contributes to the Indonesian energy supply and reduces dependence on road-based transportation modes which are more vulnerable to congestion and extreme weather.

"We want the public to know that there is great and structured work from PT KAI's rail-based logistics transportation system behind the lights at home and the [power] that industries continues to run on. In the future, [we will strengthen our] facilities and operational strategies," she concluded.

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