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.
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:
|Mandalika (SEZ incentives)
|Corporate Income Tax
|VAT and Luxury Goods Tax (PPnBM)
|Labor and Employment
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.
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