Home Blog Exploring the Biggest Industrial Park in North Sumatra Business Licenses | Company Registration Exploring the Biggest Industrial Park in North Sumatra InCorp Editorial Team 26 June 2024 5 minute reading time Table of Contents Industrial Landscape in North Sumatra Industrial Parks on Regional Development and Economic Growth 3 Biggest Industrial Parks in North Sumatra 5 Advantages of Investing in Industrial Parks Facilities and Government Incentives The Challenges and Opportunities Start Your Business with InCorp Indonesia In North Sumatra, Indonesia, the largest industrial park in the region stands as a hub of innovation and economic growth. This industrial and business park is pivotal in driving industrial development, offering many opportunities, investments, and prosperity. This article will delve into its vital role in the regional economy, uncovering the diverse sectors that flourish within its boundaries. Industrial Landscape in North Sumatra The industrial sector in North Sumatra, particularly in the Medan and Tanjung Morawa areas, is currently experiencing rapid growth. According to data from the Indonesia Statistics (BPS), the economic growth in North Sumatra in 2022 is estimated to reach 6.07%, which is a 1.91% increase from the previous year. This growth is driven by the industrial and service sectors, which have seen significant expansion, growing from 10.5% in 2021 to 19.1% in 2022. Industrial Parks on Regional Development and Economic Growth Industrial parks play a crucial role in developing economies at local and regional levels. They serve as platforms that offer favorable conditions for investments and growth, promoting industrial progress and delivering substantial benefits to the country. For developing countries such as Indonesia, industrial parks are a highly effective means of stimulating economic growth, modernizing industries, fostering innovation, and creating job opportunities. Most importantly, park development attracts foreign investments, a strategically significant factor for these countries. READ MORE:8 Biggest Industrial Parks to Start Business in BatamManufacturing Growth In Batam: A 2023 Investment OpportunityInvesting In Batam, The Emerging Business Hub Of Indonesia 3 Biggest Industrial Parks in North Sumatra There are three biggest industrial parks in North Sumatra, as listed below: 1. Sei Mangkei Industrial Estate (SMIE) ItemDescriptionLocationBosar Maligas, Simalungun RegencyInvestment Value1. Infrastructure: IDR 5,1 Trillion2. Investor/Tenant: IDR 129 Trillion or equal to 9.36 BillionTotal Area/Land Status1933,80 Ha/ Land Management RightsBusiness SchemePT. Perkebunan Nusantara IIIProject DeveloperPT. Kawasan Industri Nusantara (subsidiary of PT. Perkebunan Nusantara III)Main Industries1. Palm Oil & Downstream Industries2. Rubber & Downstream IndustriesFinancial Feasibility1. IRR: 15%2. Concession: 30 years and extendable to 20 yearsProject OwnersPT. Perkebunan Nusantara IIISector to Invest1. Industrial: Palm oil products (oleochemical, refinery, biodiesel), Rubber products, NPK fertilizer production, Diverse industries (electronics, electricity, chemical, food, building material, textile), Small and Medium-sized Enterprises (SMEs)2. Logistics: Dry Port, Tank Farm, Warehouse, Packing3. Tourism: Hotel, Golf Course, Commercial Area, MICE (Meeting, Incentives, Convention & Exhibition) 2. Kuala Tanjung Industrial Estate ItemDescriptionLocationSei Suka Sub-District, Batubara RegencyInvestment ValueIDR 28.87 trillion or equal to USD 1.95 Billion (USD 1 = 14,800)Total Area/Land Status150 ha already available and will be expanded up to 3400 HaBusiness SchemeDirect InvestmentProject OwnerPT. Prima Pengembangan KawasanMain IndustriesIndustrial EstateFinancial FeasibilityWith an IRR of 12% and an NPV of IDR 336 trillion, the project has a 14-year payback period. The land procurement area of 1,128 Ha has been approved in collaboration with the local governmentSectors to Invest1. Iron & Steel2. Processed Foods: Livestock, plantation, and fisheries3. Palm Oil Final Products: Fertilizer, oil, paper, and wood4. Cement5. Tires: Natural rubber, synthetic, chemical, plastic, and recycling industries6. Rubber Products 7. Auto Parts & Accessories: Rubber, plastic, textile, chemical, aluminum, and iron steel8. Footwear9. Petrochemical10. Aluminium 3. Medan Industrial Estate (KIM) ItemDescriptionLocationPulau Batam Street Medan Industrial Estate AreaInvestment ValueIDR 359 Billion or equal to USD 23.64 MillionTotal Area/Land Status150 Ha is still available and already clear by its existing landProject OwnerPT Medan Industrial Estate CompanyMain IndustriesInfrastructure and Manufacturing 5 Advantages of Investing in Industrial Parks Below are the compelling reasons for businesses to consider investing in industrial parks in North Sumatra. 1. Strategic Location Its proximity to the Malacca Straits and existing industries, aluminum and palm oil. 2. Abundant of Plantation Potent palm oil and rubber hinterlands while other agricultural products add more volume. 3. Strong Government Support It has been designated as a National Priority Project. It is recognized as one of the key industrial estates outside of Java, positioned to serve as the western hub of Indonesia’s industrial landscape. 4. Availability of Human Resources It has abundant cheap and low-skilled labor suitable for manufacturing with productive ages dominated. High-skilled labor can easily travel to these industrial parks. 5. Integrated with Deep Seaport and Other Infrastructure Supported by descent deep seaport, connected with hinterland access while gas and electricity access are provided. Facilities and Government Incentives According to PMK 237/2020, regulations for Taxation, Customs, and Excise Treatment in Special Economic Zones are as follows. The Challenges and Opportunities Developing industrial areas, including those in North Sumatra, is necessary to boost the manufacturing industry’s contribution to GDP by as much as 28% to avoid the Middle-Income Trap. However, developing new and existing industrial areas still needs to overcome many challenges. One of these challenges is the need for collaboration between the central government, regional governments, Industrial Area Associations (HKI), and the companies managing industrial zones. Addressing another challenge involves addressing global concerns surrounding the uptake of green and sustainable industries. This necessitates the industrial sector aligning its growth with principles of environmental sustainability and social progress. To propel the sustainability agenda forward, creating eco-industrial parks becomes imperative. These parks are catalysts for environmental responsibility and resource efficiency within the industrial sector, ensuring that growth adheres to environmental sustainability and social progress tenets. Guide to Doing Business in Batam Mailchimp Free eBook Batam Full NameEmail I have read InCorp's Privacy Policy and agree to InCorp using my information provided to contact me about related content, and services.*Download Start Your Business with InCorp Indonesia The growth of industrial and business parks in North Sumatra undoubtedly opens up promising investment opportunities. These business parks are spaces for manufacturing and production and catalysts for regional development, economic growth, and sustainability. Businesses that aim to capitalize on the potential of North Sumatra’s industrial park can work with InCorp Indonesia, which provides company registration and business license services. Please fill out the form below and let us guide you. Read Full Bio 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.