How do Motorsport Events Attract Foreign Investment?

Motorsport events gain positive attentions from the Indonesian and bring another opportunity for investing in the country

The Hype of The Modern MotoGP Race in Indonesia

Many prominent figures in Indonesia, including the Minister of Tourism and Creative Economy – Sandiaga Uno, have acknowledged the potential for sport tourism-based destinations, such as motorsport events.

He believes that utilizing plans to promote sport-tourism-based destinations would boost the economy and allow for a quick recovery post-pandemic. One of the motorsport events that excited the whole country was the comeback of MotoGP in Indonesia.

The Mandalika MotoGP series was held on March 20, 2022. The top racers of the world all gathered in Lombok, West Nusa Tenggara, to participate in the world-class motorcycle racing championship.

Organizing the MotoGP event allowed for creating between 30,000 and 40,000 new jobs and was accompanied by a lump sum revenue target. The event took place on a large scale and was anticipated by fans worldwide.

The event’s magnitude called for a warm welcome from the Indonesian president through an opening parade. The parade was attended by 16 MotoGP riders, two Moto2 riders, one Moto3 rider, and one Asia Talent Cup rider. President Joko Widodo cruised through Central Jakarta with the drivers in complete racing attire and bikes.

Before the MotoGP event, the Mandalika circuit was also used to hold another big motorsport event, World Superbike)\.

Indonesia Plans to Build other International Circuits

Seeing the success and enthusiasm within the Mandalika circuit during the race has inspired other entities to set up similar projects. Ikatan Motor Indonesia (IMI) has joined forces with Gallant Venture Pte Ltd to construct Bintan International Circuit (BIC) on Bintan Island.

The construction of this new circuit was initially intended for the Formula 1 event, the top tier of motorsport events. The circuit construction plan will require an investment in the approximate amount of IDR 1.2 trillion.

The relevant stakeholders have identified three main places that could be the location for BIC, namely Lagoi Bay, Kepri Bay, or even Berakit. Interestingly, the development of BIC will be entirely conducted through private funding without any assistance from the state budget.

The initial step is configuring the Memorandum of Understanding which a feasibility study will follow before finally attaining the approval from the international racing federation. IMI is also exploring cooperation plans with Agung Sedayu Group to develop the PIK-2 International Circuit in the Pantai Indah Kapuk area in North Jakarta.

The circuit discourse is still in its early stages of planning. Another circuit development plan is that of the Jakabaring Sports Complex in Palembang, South Sumatra. There are plans to build the Jakabaring International Street Circuit inside the aforementioned complex.

After Race Financial Benefits

Aside from the benefits of hosting the event, MotoGP Indonesia also is conducted to attract foreign investors and has successfully done so. The events leading up to the race generated an approximate IDR 500 billion.

The impact is six times the number mentioned earlier during and after the race. Demands for food and accommodation, flights, and hotels were at their peak as people worldwide flew in to watch the race at the Mandalika Circuit in Lombok.

MSMEs from various sectors have received both direct and indirect benefits. The benefits derived fulfilled the government’s aim of developing the tourism industry in West Nusa Tenggara.

Potential Economic Impact

Mandalika is a Special Economic Zone

Mandalika is given the status of Special Economic Zone (SEZ) through Government Regulation Number 52 of 2014. The primary sector of this region is tourism. The projection of labor within the Mandalika SEZ is 58,700 people. Six new investors have shown interest in building hotels in Mandalika SEZ, including Novotel, Royal Tulip, Pullman, ClubMed, Westin, and Paramount.

The Indonesian government is fully ready to extend its support. It shall do so through the extension of the Lombok International Airport runway, revitalization of the Lembar Port, handling of clean water, and other similar efforts.

Plans in Development

Mandalika is often referred to as the future of Indonesian eco-tourism. The Indonesian Tourism Development Cooperation fully backs this economic initiative alongside other stakeholders determined to attract more tourists to the island.

Solar power, water desalination plant, and open green space are all part of the plan to attract tourists to enjoy the region’s natural beauty while at the same time enhancing local culture. The Mandalika Project is avoiding some pitfalls that have previously entrapped luxury developments in Indonesia.

A large portion of the project incorporates green spaces and shall be created by working in tandem with nature in hopes of becoming a template for sustainable development. It shall do so by incorporating various environmentally friendly technologies that would enable resorts within the region to grow food efficiently and be more self-supporting.

Companies that would like to participate and participate in the region’s development can seek assistance from Cekindo regarding company registration and business licensing, as these aspects can be tricky considering the continuous changes made to the regulations.

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Pandu Biasramadhan

Pandu is the Consulting Manager at Cekindo. He has extensive experience in working with government agencies. Notably, he has provided market-entry solutions for enterprises in Indonesia and managed regional partnership channels in Southeast Asia. At Cekindo, Pandu aspires to lead the consulting team to provide top-quality market-entry services and maintain a portfolio of global clientele. His specialty is market-entry advisory and business process outsourcing.