In the past, Karimun was the destination of foreign traders and the Malay Kings. Around 1615 agents of the Dutch East India Company inspected the northwestern coast of the island for the possible construction of a fortification. The proposed fort, however, was never built. Two centuries later, Colonel William Farquhar surveyed the island after receiving permission from the Bugis Raja Muda of Johor, Raja Ja'afar. Although Karimun was deemed to be of great strategic value at the confluence of the Singapore and Melaka Straits, it was found to have insufficient sources fresh water to sustain a British trading post and a settlement.
The island has strategic geographical importance, as it is near the Straits of Malacca, an international shipping route. As the island is strategically located at the border of Singapore and Johor, Karimun being a part of the Riau Islands also is included the SIJORI Growth Triangle partnership. SIJORI Growth Triangle is a strategic partnership among Singapore, Johor and Riau Islands that combine the individual and collective strength to improve the subregion attractiveness to investors from both the region and international. SIJORI links the infrastructure, capital, expertise and rich culture of Singapore with the natural resources, lands and labour resources of Johor and Riau Islands. However, due to the stronger ties between Singapore and Malaysia, Karimun is losing its economic attraction to Singaporean investments. Another reason for the loss in attractiveness is the lack of adequate infrastructure in Karimun, especially electricity supply and the lack of transparency in the government administration.
Natural resources
Due to large scale indiscriminate fishing activity near the island recently, fish stocks have been depleted, and thus the fishing businesses have declined considerably. The main export of the island is its granite which is one of the best quality in the world. Sand has also been constantly exported, mainly to Singapore for land reclamation. Indonesian has however limited sand exports over concerns with Singapore's reclamation projects, and banned them outright in the beginning of 2007. Singapore now faces a crisis with many upcoming building developments.
On 29 June 2007 the Indonesian government conferred enclave Free Trade Zone status on Karimun; a move intended to address the issue of legal certainty for investors. Under the plan Karimun will be turned into shipyard, metal, component, agricultural, and marine produce industrial development centres.
