INTRODUCTION

Regardless of their size or physical characteristics, all territories face formidable challenges in striving for equitable development. However, as an archipelagic province, whose 1,994 islands are scattered throughout some 427,600 km2 of sea, this is particularly daunting for the Riau Islands.

Moreover, the Riau Islands’ economy has slowed down in recent years, mainly driven by the recent slump in the manufacturing sector, mainly centred on Batam (Hutchinson and Negara in this volume). The province's dependency on this sector, which is largely concentrated in one part of its territory, indicates the success of the formerly named Batam Industrial Development Authority (BIDA) in pursuing the “Factory Asia” development model (Choi and Rhee 2014). Yet, on the other hand, it shows a structural vulnerability, as any shock to the manufacturing sector will certainly have a significant impact on the province's overall economic health. Consequently, the Riau Islands Province faces two key challenges: first, diversifying its economy to underpin sustainable growth going forward; and second, ensuring that the benefits of this growth are spread to a maximum within the province.

To this end, this chapter is comprised of five sections. Following this introduction, the second section sets out the basic characteristics of the Riau Islands’ economy. The third provides a brief review of the province's economic development over the past few years. The fourth provides some ideas for addressing the economic imbalance in the province, and the fifth concludes.

THE RIAU ISLANDS’ ECONOMY

The Riau Islands Province consists of: five districts, Bintan, Karimun, Anambas Islands, Natuna and Lingga; and two municipalities, namely, Batam and Tanjungpinang. In 2018, the province's population stood at 2.14 million, of which approximately 1.33 million or around 62 per cent lived in Batam. An additional 367,000 people lived in Bintan (including Tanjungpinang) and 231,000 in Karimun (BPS Provinsi Kepulauan Riau, 2019). Together, these three islands constitute about 90 per cent of the Riau Islands’ population—indicating the province's economic and demographic centre of gravity.

The Riau Islands Province is rich in natural resources, such as minerals, oil, natural gas, and fisheries. The province's water, which constitutes around 97 per cent of its total area, contains large quantities of marine resources, in particular plentiful stocks of fish.