Riau Islands
Singapore's cross-strait workshop: Batam Free Trade Zone with 70% FDI from Singapore and Rp 200T GRDP in 2023.
Twenty kilometers from Singapore's south coast, Batam Island became Indonesia's experiment in export-oriented manufacturing. A 2006 framework established the Batam-Bintan-Karimun Special Economic Zone with Singapore, eliminating tariffs on goods flowing across the strait. Law No. 44 designated Batam a free trade zone for 70 years. The islands that were fishing villages in the 1970s now house electronics factories, precision engineering plants, and one of Asia's largest ship repair industries.
The Singapore connection defines everything. Half of Batam's exports and 70% of foreign investment originate from the city-state. Chinese investment has surged—China now leads among source countries, followed by Singapore, Malaysia, the US, and Japan. GRDP reached Rp 200 trillion in 2023, with manufacturing contributing Rp 81 trillion. The Batam Free Trade Zone recorded Rp 6.9 trillion investment in 2024; H1 2025 already hit Rp 32 trillion, exceeding 50% of the annual target.
Riau Islands offers what Singapore cannot: cheap land and competitive labor costs 12.5 miles across the strait. By 2026, the province will test whether its role as Singapore's workshop can evolve into higher-value manufacturing—or whether it remains locked in the low-margin assembly that first attracted investment decades ago.