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Guide to investing in Mandalika

Guide to investing in Mandalika

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

How to unlock the MSME Mandalika investment

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
  • CIT exemption for investment over IDR 100 billion.
  • 10 years CIT exemption for investment IDR 100 – 500 billion.
  • 15 years CIT exemption for investment IDR 500 – 1 trillion.
  • 20 years CIT exemption for investments of more than 1 trillion.
  • After the term on CIT exemption finishes, you will get a 50% CIT reduction for two years.
VAT and Luxury Goods Tax (PPnBM)
  • VAT for import goods is exempted.
  • VAT for goods delivered among companies in SEZ are exempted.
Local Tax
  • 50% – 100% local tax and retribution reduction.
Immigration
  • Visa on arrival permits a 30-day stay, with the option to extend it up to five times.
  • KITAS for foreign investors is initially valid for five years, with the possibility of extension for up to 15 years.
Labor and Employment
  • Establishment of a Special Wage Council and special Tripartite Consultation.
Land Titling
  • Right to build (HGB certificate) will be granted for 30 years, extendable for 20 years, and renewable for 30 years.
  • Extension and renewable are applicable immediately after the business is declared commercially operating.

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.

Guide to Doing Business in Bali & Lombok

Ebook Download | Guide to Doing Business in Bali and Lombok

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.

Contact our expert to explore these opportunities further by clicking the button below.

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    Pandu Biasramadhan

    Senior Consulting Manager at InCorp Indonesia

    An expert for more than 10 years, Pandu Biasramadhan, has an extensive background in providing top-quality and comprehensive business solutions for enterprises in Indonesia and managing regional partnership channels across Southeast Asia.

Frequently Asked Questions

    For business and work visas, the sponsor must be a company legally registered in Indonesia. Regarding social-cultural and retirement visas and KITAS & KITAP, the sponsor must be an Indonesian legal entity or a citizen. InCorp provides visa sponsorship should you require this service.

    To provide you with accurate pricing information for our product registration services, we consider the complexities of your inquiries and the dynamic nature of regulations in Indonesia. As a result, the pricing for the service may vary accordingly. For detailed information, please get in touch with our consultants.

    The duration depends on the visa type.The duration depends on the visa type:

    • Work and stay permits take approximately two months. If the applicant is a company director, the visa is valid for one year.
    • For other positions, the visa is valid for six months.
    • Multiple-entry business visas take approximately one week and will be valid for one year.
    • Single-entry business and social-cultural visas take approximately one week. They will be valid for two months, with the possibility to extend the visa four times, each time for an additional 30 days.
    • A retirement visa takes approximately two months and will be valid for one year.

    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.

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