Long known for its spices, exotic fauna, and natural minerals and reserves, Sumatra holds numerous investment opportunities. According to the Ministry of Investment/BKPM’s data, IDR143.9 trillion, or equivalent to USD10 billion, worth of investment flowed into the island’s exciting new ventures from January to September 2021. Incentives such as relaxation on taxes and a simple one-stop platform for the registration and license administration process make it easier for investors to participate in the exciting development on the island.
What are the unique investment ventures to look at in Sumatra?
Sekupang, The Next International Medical Destination
The Indonesian government has long considered establishing a medical tourism sector in the country to serve especially Indonesian patients who at least spend IDR100 trillion, which means nearly USD7 billion annually for overseas medical expenses. The plan is about to come to fruition with the establishment of Sekupang International Healthcare (SIH) in Batam. The transaction stage is planned to be conducted in 2022 and the construction period is projected to last for four years. SIH’s grand plan consists of international hospitals, pharmacy, and medical devices, medical personnel vocational education, accommodation, wellness tourism, and healthcare management system. The featured facilities are a cardiovascular center, cancer center, stem cell center, women and fertility center, cosmetic and plastic surgery, and retirement village. “[The SIH] project has three concepts: medical, tourism, and education. It is comprehensive,” stated BP Batam Head of The Batam Free Trade and Free Port Zone (Kawasan Perdagangan Bebas dan Pelabuhan Bebas Batam/ KPBPBB) and SEZ Development Irfan Syakir Widyasa in an online seminar held by the Indonesian Embassy in Singapore, earlier on December 2021, about investment opportunities in the Riau Islands. With its proximity to the medical destinations chosen by Indonesian patients who mostly opt for Thailand, Singapore, and Malaysia, SIH is prime to become the next medical destination for Indonesia’s growing middle class and high-end patients. The financial analysis for SIH development with a 30-year assumption gives a net present value (NPV) of USD15,271,001.38 with an internal rate of return (IRR) of 11.51%, or higher than the 10.81% discount rate, with a payback period of 11 years and four months.
Aceh: Halal, Luxurious, and Adventurous
For investors seeking a unique investment opportunity, Aceh has Ladong and Lhok Weng. Ladong Industrial Estate will build a specialized halal food industrial zone, while Lhok Weng will focus on luxury resort and water sports tourism. In 2019, the State of the Global Islamic Report stated that the global Muslim population spent around USD2.2 trillion on the consumption of halal products, such as food and beverages, medicines, and other lifestyle products that support a halal lifestyle with USD173 million of it coming from Indonesian consumers. The global figure is predicted to increase to USD2.4 trillion by 2024.
This growing market becomes the drive for the development of Ladong Industrial Estate. Valued at IDR196 billion or nearly USD13.6 billion with a payback period of eight years and IRR of 14.75%, the unique halal industrial zone is expected to be bustling in the near future.
Crossing the sea from Aceh mainland is the Weh Island where Lhok Weng Luxury Resort and Waterfront will be developed. It will be open for business opportunities such as recreational estates, luxury residences, and wellness & rejuvenation centers. The compound will be integrated with other development plans such as a yacht marina in Klah Island, golf and resorts in Bango, adventure resorts in Gua Sarang, diving areas on Rubiah island, and the Indonesian Zero Kilometer Monument.
Lhok Weng’s investment value is USD13.54 million with a business scheme of BOT or cooperation (concession period of 30 years) and an estimated IRR of 16.44%. Established within the Sabang Free Trade Zone, there will be exemption of import duties, VAT, and sales tax on luxury goods and taxes. Investors can also enjoy in-house services for foreign business registration and permits, import licenses, and export permits.