As a thriving economic hub in North Sumatra, Medan offers a range of lucrative, profitable business opportunities for those seeking to invest and innovate.
From the bustling trade in the city’s heart to the expanding industries on its outskirts, this article explores a curated selection of profitable ventures ripe for exploration in Medan.
Whether you’re a seasoned entrepreneur or a budding business enthusiast, this guide aims to shed light on the potential endeavors that can thrive in this dynamic urban landscape.
Prestige investment destinations in North Sumatra
Medan City has become one of the primary investment targets in North Sumatra province (Sumut) in the first half of 2023. Specifically, five areas have garnered the most interest from domestic and foreign investors. These areas include:
- Simalungun Regency: investment value of IDR 4.72 trillion.
- Medan City: investment value of IDR 3.87 trillion.
- South Tapanuli Regency: investment value of IDR 2.86 trillion.
- Deli Serdang Regency: investment value of IDR 2.38 trillion.
- Mandailing Natal Regency (Madina): investment value of IDR 1.7 trillion.
The realization of investments in North Sumatra province for the first half of 2023 grew by 15.75% compared to the same period in 2022. In the first half of 2023, the total investment realization reached IDR 22.206 trillion, higher than in 2022 with IDR 19.184 trillion.
The rapid growth of investments in Sumut is attributed to its strategic location and abundant investment potential.
This potential is evident in Special Economic Zones (SEZ) like Sei Mangke, Medan Industrial Area (KIM), Lake Toba National Tourism Strategic Area (KSPN), Bus Rapid Transit (BRT) in Mebidangro, Sports Centre, Kuala Tanjung Industrial Area, and Kuala Namu Airport City.
Read more: Batam’s manufacturing industry: key insights and analysis
Why should investors consider investing in Medan?
The decision to invest in Medan City presents many compelling advantages. Therefore making Medan a prime destination for your business growth and success. These advantages include the following:
1. Strategic location
Medan’s geographical placement positions sits advantageously near neighboring countries, notably Malaysia, facilitating international trade and cooperation.
2. Abundant natural resources
Medan’s vast and diverse natural resources offer immense potential for various industries, promising sustainability and profitability.
3. Market potential
A substantial and promising market awaits within Medan, with consumer opportunities and economic growth prospects.
4. Supportive government
The local government is steadfast in its commitment to promoting investment. It actively supports infrastructure development and enhances public facilities, fostering an environment conducive to business success.
5. Skilled workforce
Medan is home to a highly skilled and experienced workforce spanning multiple industrial sectors, providing businesses with a valuable human resource pool to tap into for growth and innovation.
Other than the above factors, Medan City has been recognized as one of the top eight nominees for Best Investment Services in 2022 at the national level. This nomination is based on an assessment and evaluation conducted by the Ministry of Investment/Indonesian Investment Coordinating Board (BKPM).
Top sectors for investment in Medan
In the first half of 2023, five sectors have attracted interest from domestic (PMDN) and foreign (PMA) investors in North Sumatra province, including Medan. These five sectors are:
- Electricity, gas, and water: Attracting investments totaling IDR 3.55 trillion.
- Food industry: Garnering investments amounting to IDR 3.38 trillion.
- Chemical and pharmaceutical industry: Drawing investments worth IDR 3.05 trillion.
- Transportation, warehousing, and telecommunications: Securing investments valued at IDR 2.84 trillion.
- Mining: Attracting investments reaching a total of IDR 2.33 trillion.
The foreign investor with the highest investment value is Singapore, with an investment of IDR 5.9 trillion. Following that, the Netherlands has an investment value of IDR 3.36 trillion. Moreover, investments from the British Virgin Islands total IDR 375 billion, Malaysia with IDR 284 billion, and Switzerland with IDR 204 billion.
Medan City actively seeks investment
The Medan city government is actively seeking investments from various sectors. In July 2023, the Mayor of Medan, Bobby Nasution, invited Singapore to invest in Medan, particularly in the healthcare sector.
The Medan city administration is currently running the Medan Medical Tourism (MMT) program to enhance the healthcare and tourism sectors in the capital of North Sumatra Province.
On another note, in June 2023, Blue Bird expressed its readiness to invest in transportation development in Medan. They are interested in the progress and population of Medan, considering it one of the major cities in Indonesia.
Challenges in Medan City development
Global, national, and regional economic conditions can influence the development challenges in Medan. According to the Mayor of Medan, some development challenges include controlling inflation and nurturing and growing the local economy.
Micro, small, and medium-sized enterprises (MSMEs) become the main target to foster a more conducive investment climate, including accelerating urban infrastructure to make economic activities more efficient. The Mayor of Medan emphasizes the importance of an effective Regional Budget (APBD) in addressing these challenges.
Conclusion
Medan City, as the capital of North Sumatra province, offers several advantages for investment. Apart from its advantages, Medan’s nomination as one of the top eight Best Investment Services in 2022 at the national level further emphasizes Medan’s attractiveness for investment.
For investors looking to establish their presence in Medan, InCorp Indonesia stands ready to provide invaluable support. With our comprehensive services encompassing company registration and business licensing, we’re dedicated to simplifying and optimizing your business operations in this city.
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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
- Set up a PMA (Perusahaan Modal Asing)
- Set up a RO (Representative Office)
For tax purposes in Indonesia, companies must maintain their books in Rupiah, using the Indonesian language, and store them within the country. Exceptions for using USD and English in bookkeeping require prior notification to the authorities and any use of languages other than Indonesian needs approval from the Ministry of Finance.
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According to Law No. 25/2007 on Investment, foreign investors are required to establish a PMA company in order to make direct investments and conduct commercial and business activities in Indonesia. A PMA firm in Indonesia is a legally recognized business entity that can engage in various commercial and business operations as long as it complies with the current laws and regulations. As for RO, its purposes include conducting market feasibility studies and liaison activities.
