Tanjungpinang — A 2026 study finds that domestic investment and improvements in human development have not translated into lower poverty in Indonesia’s Riau Islands Province. The research, conducted by Marsella Br Tambunan and Aprillia Nilasari from the Department of Economics, Universitas Negeri Surabaya (UNESA), shows that both Domestic Investment (PMDN) and the Human Development Index (HDI) are positively associated with increases in the poverty line between 2017 and 2024. The findings matter because they challenge the assumption that growth and development indicators automatically reduce poverty, especially in archipelagic regions with uneven development patterns.
The Riau Islands present a unique development landscape. While the province ranks among the lowest in poverty rates nationally—around 4.78 percent in 2024—significant disparities persist beneath the surface. Economic growth is heavily concentrated in Batam and the Barelang area, leaving island districts such as Natuna, Anambas, Lingga, and Karimun lagging behind in infrastructure, public services, and economic opportunities.
This imbalance reflects broader structural challenges. Coastal communities and traditional groups such as the Orang Laut depend on marine-based livelihoods that are often overlooked in modern development policies. At the same time, migration to urban centers like Batam has created new pockets of urban poverty, particularly among workers who are unable to access formal employment.
To examine these dynamics, the researchers analyzed secondary data from Indonesia’s Central Bureau of Statistics (BPS) and the Investment Coordinating Board (BKPM). The dataset covers seven districts and cities over an eight-year period, producing 56 observations. Using a panel data approach, the study evaluates how PMDN, HDI, and the Open Unemployment Rate (TPT) relate to changes in the poverty line across the province.
The results reveal a pattern that runs counter to conventional expectations.
First, domestic investment (PMDN) shows a positive and statistically significant relationship with the poverty line. Rather than reducing poverty, increased investment is associated with rising poverty thresholds. This outcome is explained by the concentration of investment in Batam and its focus on capital-intensive industries. These sectors generate economic output but create limited employment opportunities for local communities, particularly in rural and coastal areas.
Second, the Human Development Index (HDI) also shows a positive and significant effect on the poverty line. While HDI reflects improvements in education, health, and living standards, these gains are unevenly distributed. Urban areas such as Batam and Tanjungpinang benefit more from development programs, while island regions continue to face limited access to quality education and healthcare. As living standards improve in cities, the cost of living rises, pushing the poverty line upward without necessarily increasing real income for vulnerable populations.
Third, the Open Unemployment Rate (TPT) does not have a significant effect on poverty. This finding highlights the distinctive nature of labor markets in archipelagic regions. Many residents rely on informal and marine-based economic activities that are not fully captured in official employment statistics. Fishermen and coastal traders often maintain income streams outside the formal labor system, making unemployment rates a less reliable indicator of economic vulnerability.
Taken together, the three variables have a strong combined influence on poverty, with a coefficient of determination reaching 95.97 percent. This indicates that PMDN, HDI, and TPT collectively explain most of the variation in the poverty line across the Riau Islands during the study period.
Marsella Br Tambunan and Aprillia Nilasari of Universitas Negeri Surabaya emphasize that investment and human development must be evaluated not only by their scale but by their distribution and inclusiveness. Their analysis shows that when investment is concentrated in capital-intensive sectors and urban centers, its benefits fail to reach communities that need them most.
The study also reinforces the importance of understanding poverty as a multidimensional issue. Economic growth alone does not guarantee equitable outcomes, particularly in regions with geographic fragmentation and structural inequality. Policies that overlook local economic structures—such as marine-based livelihoods—risk widening the gap between growth centers and peripheral areas.
The implications for policymakers are significant. Regional governments are encouraged to redirect investment toward labor-intensive sectors, especially those linked to the marine economy, which remains the backbone of many island communities. Expanding infrastructure and improving connectivity between islands could also help distribute economic benefits more evenly.
In addition, human development programs need to prioritize equitable access. Improving education and healthcare in remote island districts is essential to ensure that HDI gains translate into real improvements in living standards across all communities.
For businesses and investors, the findings highlight opportunities in underdeveloped sectors and regions. Investments that align with local economic potential—such as fisheries, marine processing industries, and inter-island logistics—can generate both economic returns and social impact.
Ultimately, the study underscores a critical message: growth indicators must be interpreted in context. In regions like the Riau Islands, the effectiveness of investment and development depends on how well they address structural inequality and reach marginalized populations.
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