Mandalika has emerged as a compelling destination for investors. The growing region offers diverse opportunities, from large-scale enterprises to MSME Mandalika investment prospects.
Nestled within the picturesque landscapes of West Nusa Tenggara, Mandalika has become a focal point of interest in the past few years.
Not only for its natural beauty, Mandalika has an abundance of investment potential, especially when it launches the new international motorsport circuit.
Investment potential in Mandalika
Mandalika, situated in West Nusa Tenggara, offers exciting investment prospects, especially following the highly successful Pertamina Grand Prix of Indonesia.
The event occurred at the Mandalika Circuit from October 13 to 15, 2023, drawing a record-breaking attendance of 103,000 spectators.
The financial gains from the MotoGP event are anticipated to reach IDR 5.4 trillion (USD 343.5 million), a 20% increase compared to last year’s turnover of IDR 4.5 trillion.
Tourism and Creative Economy Minister Sandiaga S Uno revealed that ticket sales for MotoGP Mandalika exceeded expectations, reaching 103,000 attendees, surpassing the initial target of 100,000.
Read more: Start tourism investment in Bali and Lombok
The promising investment sectors in Mandalika
Some promising sectors for investment in Mandalika include:
1. Micro, Small, and Medium Enterprises (MSMEs)
The Pertamina Grand Prix 2023 has positively impacted income and job opportunities for local workers, thanks to the involvement of multiple small businesses.
Pertamina has supported 50 small businesses, including those from the East Lombok branch of the Pertamina House of State-Owned Enterprises (RB Pertamina), to offer souvenirs and snacks near the Mandalika circuit, showcasing the Mandalika MSME investment opportunities.
2. Property
The MotoGP event in South Lombok has lured numerous tourists and investors, significantly increasing demand for accommodations and rental properties. This situation presents a favorable opportunity for real estate investors.
Due to the increased interest and demand, property prices in South Lombok are increasing. Investing at this time has the potential for significant returns as the region keeps expanding.
3. Infrastructure development
The Indonesia Tourism Development Corporation (ITDC) has prepared the basic infrastructure in the Mandalika area ahead of the Grand Prix of Indonesia.
The development includes improvements to road access, sidewalks, public street lighting (PJU), parking areas, and utility networks like electricity, clean water, and internet.
Why invest in Mandalika?
ITDC, the governing body of the Mandalika Special Economic Zone (SEZ), continues to develop businesses in the area. As of September 2023, investments in Mandalika have reached IDR 5 trillion.
Ema Widiastuti, the Director of Development at ITDC, mentioned that the Mandalika SEZ has employed 8,100 people.
Ema explained that out of the total land area of 1,035.67 hectares owned by the Mandalika SEZ, only 30% of the land has been developed for various investment activities.
ITDC plans to expand tourism sports events in the long term by constructing a horse racing arena and a tennis court in Mandalika.
Government support and incentives
Mandalika, as one of the SEZs, presents an attractive investment prospect for global investors.
With a projected increase in tourist numbers from 2.4 million in 2018 to 12 million by 2045, Lombok Island is on track to become a top-tier tourist destination. Some of the government’s support can be seen in the below table:
| Arrangement | Mandalika (SEZ incentives) |
| Corporate Income Tax |
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| VAT and Luxury Goods Tax (PPnBM) |
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| Local Tax |
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| Immigration |
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| Labor and Employment |
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| Land Titling |
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Potential risks
Albeit Mandalika offers exciting investment potential, a business should also be aware of the potential risks, which include:
1. Economic openness
The risks pertain to market accessibility for businesses and investors looking to enter.
It encompasses the country’s receptiveness to foreign direct investment and its competitive appeal relative to regional and global destinations.
2. Government intervention
Risks arise from taxation and financial barriers imposed on foreign and local companies.
3. Legal concerns
It covers issues related to the rule of law and the threats businesses face from corruption.
It also encompasses the regulatory environment’s quality in a given market and the protection of property rights, both real and intellectual.
4. Political stability
The upcoming presidential election in February 2024 will test Indonesia’s recent political stability and the extent to which it continues liberalizing reforms.
Start investing in Mandalika with InCorp Indonesia
Mandalika offers lucrative potential for investment, especially in Mandalika MSMEs investment potential, supported by the growing tourism sector and a myriad of government incentives for businesses.
InCorp Indonesia provides company registration and Investor KITAS services to help investors set up their business in the emerging global tourism hub.
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Disclaimer
The information is provided by PT. Cekindo Business International (“InCorp Indonesia/ we”) for general purpose only and we make no representations or warranties of any kind.
We do not act as an authorized government or non-government provider for official documents and services, which is issued by the Government of the Republic of Indonesia or its appointed officials. We do not promote any official government document or services of the Government of the Republic of Indonesia, including but not limited to, business identifiers, health and welfare assistance programs and benefits, unclaimed tax rebate, electronic travel visa and authorization, passports in this website.
Daris Salam
COO Indonesia at InCorp Indonesia
With more than 10 years of expertise in accounting and finance, Daris Salam dedicates his knowledge to consistently improving the performance of InCorp Indonesia and maintaining clients and partnerships.
Frequently Asked Questions
- Import facilities
Investors in Indonesia, particularly in manufacturing, may benefit from import tax exemptions for capital goods and raw materials through the Master List Facility. The imported goods must meet specific criteria, such as not being produced locally or not meeting industry demand despite local production. - Tax holiday
The government offers CIT reductions of 50% or 100% for 5–20 years for listed pioneer industries, based on investment value. After this period, a CIT reduction of 25% or 50% applies for two fiscal years. Non-listed sectors can also apply by meeting criteria demonstrating pioneer industry status. - Tax allowance
For companies in certain designated areas or regions, the government may provide the following tax concessions:
Net income reduction up to 30% of the amount invested, prorated at 5% annually for six years, on condition that the assets invested are retained for the same duration.
Accelerated depreciation and/or amortisation deductions
An extension of tax losses carried forward for a maximum of ten years
A 10% (or lower if treaty relief is available) withholding tax rate on dividends paid to non-residents
The applicant eligible has to meet high-level-criteria for the above tax facilities:
High investment value or for export purposes
High manpower absorption
High level of local content - Investment allowance
The government offers a reduction in net income of up to 60% of the investment, distributed at 5% annually over six years of commercial production, contingent upon the retention of invested assets for the same duration. To qualify, applicants must meet business line eligibility criteria and employ a minimum of 300 Indonesian workers in the project. - Super deduction
This facility could be granted to certain businesses, such as:
60% reduction in net income of the amount of tangible fixed assets invested for labor-intensive industries, distributed throughout a certain time frame.
Up to 200% reduction in the gross income of the amount spent for human resources development in certain competency activities.
Up to 300% reduction in gross income of the amount spent for certain R&D activities in Indonesia.
A newly established PMA company in Indonesia is typically provided with import facilities, tax holidays, tax allowances, or investment allowances.
Pioneer industries are industries that have a wide range of connections, provide additional value and high externalities, introduce new technologies, and have strategic value for the national economy.
According to the latest provision regarding Halal Product Assurance, halal certification for many consumer products in Indonesia that was previously voluntary has now been mandatory. Food and beverage products are the first Halal certified before 17 October 2024.
A limited liability corporation is required by Indonesian company law to have two or more shareholders, who may be either a legal entity or an individual. The foreign investor must find a second shareholder to own shares in the PMA firm for investments that are 100% open, which could be an affiliated party.
You can transfer the license if your local distributor agrees to change the product license holder.
