Batam, Bintan and Beyond: Riau Islands as Indonesia’s hotspot for Manufacturing and Digital Investments

With proximity to Indonesia’s major trading partners, Riau Islands is one of the country’s premier manufacturing hubs, with the industry contributing over 40% to its economy in 2020. The province is home to large industrial estates such as the Nongsa Digital Park and Bintan-Batam-Karimun Free Trade Zone. In post-pandemic Indonesia, the province is a hotspot for foreign investments.

In the Webinar on “Batam, Bintan and Beyond: Post-Pandemic Economic Strategies for Riau Islands“, key figures from the private and public sectors, along with academics from Indonesia and Singapore, has gathered to discuss Riau Islands’ economic dynamism and investment opportunities. The panelists offered their expertise on how Riau Islands’ economic policies and strategies could benefit potential investors from Singapore, Indonesia and beyond. The Webinar welcomed over 200 participants from 16 countries.

Key Highlights

A. COVID-19 and Riau Islands Economy

  • Mr Ansar Ahmad, the Governor of Riau Islands, mentioned that the COVID-19 pandemic has caused the economy to contract by 3.8% in 2020. but the province is quickly recovering, growing by 3.43% in 2021. However, this number remains low compared to the pre-pandemic level.
  • Mr Rafki Rasyid from the Indonesian Employers Association of Riau Islands identified manufacturing, information and communication, and health services as the most resilient sectors in Riau Islands amid the pandemic. Meanwhile, the mining, agriculture, forestry, and fisheries sectors – potential leading sectors in the Riau Islands – remained sluggish in 2021.
  • ACI Research suggested that despite the pandemic, Riau Islands registered a record level of foreign investments in 2020, with FDI inflows exceeding US$ 1.65 billion, covering 2,294 projects. The bulk of the capital injection is in the base metals and metallic items industry and the machinery, electronics, and precision items industries.
  • The sector with the highest growth rate in 2021 is company/business services (14.40%), followed by health services and social activities (12.30%), information and communication (9.59%), manufacturing (6.45%), and construction (4.74%).

B. Digital Landscape

  • Indonesia has 202.6 million internet users as of January 2021. The country experienced tremendous growth in e-commerce, online travel, online media, and ride-hailing.
  • Mr Mike Wiluan, the CEO of Nongsa Digital Park, commented on Riau Islands’ enormous growth potential in the digital economy. Batam’s strategic location and proximity to Singapore makes it a suitable digital hub. 
  • The Nongsa Digital Park (NDP) was set up to build a vibrant digital ecosystem in the province. NDP provides supporting infrastructure in internet connectivity, data centres, and talent development in the digital and renewable energy sectors. The park was granted SEZ status in 2021.

C. Economic Outlook and Investment Strategies

  • Amid the decreasing COVID-19 cases and the high vaccination rate, Mr Rasyid is optimistic that the province is heading towards economic recovery. The border reopening with Singapore will likely stimulate tourism activities and business exchanges. Furthermore, an improvement in the consumer confidence index reflects business actors’ expectations and optimism towards the province.
  • Mr Bambang Hendrawan, as the Head of the Centre of Competitiveness and ASEAN Study COCAS Polibatam, pointed out that Riau Islands is the only province in Indonesia with four Free Trade Zones[1] and three Special Economic Zones[2]. These facilities will support business creation and investments in manufacturing, mining (bauxite), information technology, and tourism. 
  • Mr Andri Rizal, as the Head of Regional Planning, Research and Development Board of Riau Islands, highlighted several National Strategic Project (NSP) in Riau Islands that prioritised industrial development, infrastructure, and tourism. Notable projects include the Bintan Aerospace Industrial Estate Development, Batam-Bintan Bridge Construction, and Nongsa Batam Tourism Strategic Area Development.

By Doris LIEW Wan Yin

[1] The four Free Trade Zones are located in Batam, Bintan, Karimun and Tanjung Pinang
[2] The three Special Economic Zones are Galang Batang SEZ, Nongsa SEZ and Batam-Aero Technic SEZ

View and download the presentation materials below:

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