Masterplan to make a rich province even more powerful
RIAU HAS ABUNDANT RESOURCES, CHIEFLY OIL AND GAS, BUT IS ALSO BLESSED WITH WILD FORESTS AND DEPOSITS OF GOLD, TIN, BAUXITE AND COAL

SALEH DJASIT Governor of Riau Province

Situated in central Sumatra, Riau is one of Indonesia’s richest provinces, producing around half the country’s oil and gas output.
The area’s economic development has been closely linked with its proximity to Singapore and Malaysia across the Strait of Malacca. It has recorded faster than average growth – typically 10 percent per annum – since the financial meltdown in 1997.
Riau Governor Saleh Djasit says: "The most important thing about Riau is its strategic location. Together with Malaysia and Singapore, we control the Malacca Strait. This is the busiest shipping route in the world.”
The province includes the Riau archipelago, a group of large islands off the coast of Sumatra. Two of the islands, Batam and Bintan, have received billions of dollars worth of investment from Singapore, pumped into manufacturing plants on their industrial estates. The islands are also a popular
destination for tourists.

RIAU, with its rapidly expanding economy, hopes to provide an increasingly prosperous future for its young generation.

As well as investment from south-east Asian countries, the US has played an important role in shaping the modern Riau economy.
Caltex – now part of the ChevronTexaco group – is one of the most important foreign investors in the region, supporting various social and development projects as well as making a contribution to the national economy and the public purse through oil production. Crude oil output from Riau stands at around 800,000 barrels a day.
Mr. Djasit says Caltex is helping to plan the long-term development of the province, which he hopes will become one of the most successful business centers in the region within the next two decades.

"In 2020, Riau will be at the heart of the economy and Malay culture. That is our plan," he says. "To implement this strategy, we are co-operating with Caltex in creating a masterplan for Riau. Caltex is employing a consultant from Hong Kong who already has experience in Malaysia, Australia and China to work with our team from Riau University. I expect the masterplan will be ready this year, and next year we will be ready to implement it."
He adds: "Caltex is a very important investor and can serve as an example for others to follow."

Separately, the Governor has an American adviser from Berkeley University to help attract investment to the province.
Riau undoubtedly has the building blocks to achieve its plan. The province’s ambitions are fueled by its hydrocarbon reserves which, due to the introduction of the autonomy law, are now channeled back to the province – home to nearly five million people. Since the introduction of the new law, Riau’s budget has become six times greater – a staggering increase.

As well as oil and gas, other natural resources include extensive forests, coal and other minerals. The government is promoting opportunities in the energy sector, minerals – including gold, tin, bauxite and cement – plus forestry and value-added processing activities in agriculture.
Improvements to the agricultural sector will have the most impact on the lives of the Riau people.
"We have a prosperous agribusiness , especially palm oil production," Mr. Djasit says. "About 2.5 million acres of palm-oil plantation exist in the province. But our problem now is the lack of balance between the plantation area and the processing industry. We need more factories that can process the raw material."

Indeed, there are 10 million acres of forest which supply two big paper factories with a total production of three million tons a year, mostly destined for export.
Other exports include cocoa, rubber, plywood, electronic products from Batam, and garments also from Batam and Bintan.
Mr. Djasit has identified five pillars for development in the long-term. These are the economy, education, healthcare, culture and religion – Riau is a predominantly Muslim province.
"During my three years in this position, I have convinced the people that Riau has great potential and opportunities to increase our quality of life and prosperity," he says.

The creation of a Riau Investment Corporation, a one-stop shop for investors, which can assist with licenses and permits, highlights just how serious the province is about attracting more foreign companies. The local administration is regarded as one of the most business-friendly provincial governments in the country.
"I think for Americans, oil and gas still attract them the most," says Mr. Djasit. "But we hope they can also help us develop our infrastructure like sea ports and toll roads. We are now preparing to build a toll road from Dumai to Pekanbaru."

Further investments in infrastructure are planned including more toll roads, new sea ports in Kuala Enok and Buton, plus development of the railways and the creation of a small provincial airline. Riau is also looking at the possibility of supplying electricity to neighboring Malaysia.
Mr. Djasit believes the message is getting through. "Indonesia nowadays is probably still confusing to foreigners," he says. "I believe that next year they will come to Indonesia and I hope that Riau will be one of their main destinations."

Certainly, there is considerable potential for the development of tourism in the province. Riau is already one of the most popular destinations for tourists, after Bali and Jakarta, with two million arrivals during 2001.
"For tourists we have a lot on offer, particularly unspoiled islands and culture to enjoy," says Mr. Djasit. "We also have several palaces in Siak, only about two hours from Pekanbaru; there are Buddhist temples in Muara Takus, river rafting, waterfalls and even wild-pig hunting. In Bintan and Batam there are beautiful resorts and, of course, you must not forget to see the elephants," he adds.