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Economic Performance

Aceh’s economy was in an uptrend performance, before in 2020 it’s slumped amid pandemic COVID-19. Agriculture & household consumption remains the driver of growth, those sectors help prop the ailing economy during the pandemic downturn so that Aceh’s gross regional domestic product plunges relatively moderate compare to GDP. In the middle of 2021, the positive economic growth indicate the recovery has been going on.

With an increase of 2.56% compared to the same period last year (yoy), this achievement was quite progressive because it was able to escalate the economy in the previous month which fell as deep as -1.95 yar on year. Based on business field, Aceh’s economic growth was massively supported by the agricultural sector (30.77%) and trade (15.02%). Meanwhile, in terms of expenditure, household consumption (58.43), investment (34.71) and government consumption (24.41) are very powerful and dominate.

To ensure economic performance and market stability, stakeholders throughout Aceh continue to collaborate in controlling consumer price index. Historically, inflation in Aceh has been maintained and is in a stable and predictable position so that it does not interfere the regional economy. During the past 5 years (2015 – 2016) inflation in Aceh province has tended to decline. The highest inflation rate occurred in the fourth quarter of 2017 at 4.25% (yoy) and the lowest in the mid of 2020 at 1.36% (yoy). 

In order to improve the quality of the economy in Aceh as well as strengthen foreign exchange reserves, Aceh is a region that strongly supports export activities in various sectors. Of all commodities, the export value in general has increased from 2018 to 2021 in the first quarter. This number is also a good signal of export activities after the COVID-19 pandemic. From the available data, the increase in exports reached 49.52% with a nominal value of $32.65 million in the second quarter year on year.

To foster the investment in Aceh, the regional government formalize several policies that provides investor-friendly circumstances across Aceh. As mentioned in the Qanun No. 5/2009, investors will be given various facilities such as legal certainty, openness, accountability, professionalism and equality.

Political stability and optimal service for investors will also be a priority to ensure the comfort of investing in Aceh. Likewise, with the availability of adequate infrastructure, intensive coordination with relevant technical agencies to synchronize infrastructure planning with investment needs also continuously pursued.

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About RIRU

Regional Investors Relation Unit (RIRU) is an initiative of regional stakeholders to minimize asymmetric information in terms of investment to increase positive perception. RIRU is a part of the integration between regional, national and global investment relation. The background of this unit is to synergize Ministry/Institution roles and efforts in terms of intensifying foreign investment flows.

In Aceh, regional stakeholders from various background related to investment are incorporated by Governor Decree as Investment Acceleration Task Force. The main objectives of RIRU are recapitulated as follows:

  • As a coordination platform on public policy and strategy formulation towards opportunity and threats related to investment.
  • To disseminate the latest economic and financial statistics through website on regular basis.
  • Promoting regional potency in form of clean and clear project to targeted investor.
  • Preparing Investment Project Ready to Offer.
  • Debottleneck problems and issues related to investment realization.    
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Aceh Industrial Estate (KIA) Ladong, Aceh Besar

KIA Ladong is an industrial area which was inaugurated on December 20, 2018, supported by a strategic location to the City Center (22.8 km), to Sultan Iskandar Muda Airport (33 km), to Malahayati Port (11.6 km) and the Blang Bintang Toll Gate (11 km). With an area of 66 hectares that has been freed from the 250ha development plan, it is hoped that KIA Ladong will become an industrial centre and downstream centre for Aceh’s leading commodities based on the halal industry such as food, beverages and other products.

Currently, KIA Ladong has the following permits: Area Regulations, Industrial Area Business Permits (IUKI), Environmental Permits and Location Permits.

Supporting infrastructure:

  • Waste Management Supply
  • Electricity
  • Wastewater Treatment
  • Security
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Special Economic Zone (SEZ) Arun Lhokseumawe

The SEZ Arun Lhokseumawe is located in North Aceh Regency, Lhokseumawe City—Aceh province, and was formed based on Government Regulation Number 5 of 2017. SEZ is based on the geographical location of Aceh which is crossed by the Sea Lane of Communication (SLOC), that is the Malacca Strait and has a comparative advantage to become part of a global production network or global value chain. The SEZ was formed from a consortium of several existing companies, such as PT Pertamina, PT Pupuk Iskandar Muda (PT PIM), PT Pelindo 1, and also the Aceh Regional Development Company (PDPA). The PDPA consists of 3 (three) areas: the Arun refinery complex, Dewantara District and Jamuan village, which is the exact location of PT KKA factory.

The SEZ Arun Lhokseumawe was inaugurated by the President of the Republic of Indonesia, Mr Joko Widodo on December 14, 2018. The SEZ focuses on

several sectors, such as energy, petrochemical, agroindustry
to support food security, logistics and kraft
paper producing industries. From the energy sector (oil
and gas), LNG regasification, LNG Hub / Trading, LPG
Hub / Trading, Mini LNG Plant PLTG will be developed
by developing environmentally friendly power plants or
providing clean energy solutions. Logistics infrastructure
is also being developed to support input and output from
the oil and gas; meanwhile, petrochemical and agroindustrial
industries will be developed through improving
international standard port and dock infrastructure.

Besides, the SEZ Arun Lhokseumawe is one of the
rich and productive aquatic ecosystems that supports
the development of the fisheries industry. With its
potential, the SEZ Arun Lhokseumawe will also become
a base for the agricultural sector with the support of
the superior commodities such as palm oil, coffee, cocoa, rubber, coconut, essential oils and others. The SEZ Arun Lhokseumawe will develop along with the regional development of several countries in the South Asia region through revitalizing the marine economy of the Maritime Silk Road. Hence, the SEZ Arun Lhokseumawe is located in the ASEAN and South Asian trade markets. With this potential and opportunities, the SEZ Arun Lhokseumawe is projected with an attractive investment of US $ 3.8 million and is launched to recruit as many as 40,000 workers by 2027.

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Sabang Free Port and Free Trade Zone (FTZ)

Sabang is the western gateway to Indonesia and an entrance for investment, goods and services from within and outside the country. The location of Sabang is right on the international shipping route that connects trade between the east via the Melaka Strait and the west via the Indian Samudera which bordered by the Bay of Bengal. Thus it is suitable to be an international shipping traffic service center. This area is also positioned as a frontier in global competition.

Access to the Sabang is supported by sea and air transportation facilities. For sea transportation, Balohan Port provides route from Sabang to Malahayati Port in Banda Aceh (Capital of Aceh Province). Yachts and cruises through Phuket and Langkawi are also an alternative for foreign tourists. For air transportation, Sabang has Maimun Saleh Airport which tourists can take a connecting flight via Kuala Lumpur, Malaysia or Medan and Jakarta, Indonesia

The Sabang Management and Development Agency (BPKS), located in Sabang City, is an agency authorized to manage and develop the Sabang Area in accordance with the functions of the Sabang Area.

Sabang Investment Opportunities
The presence of BPKS as the manager of the Sabang Area is expected to be a partner of the regional government in the management and implementation of development, both facilities and infrastructure to support investment and licensing services. Therefore, it will attract investors to invest in the Sabang area. BPKS determines 4 priority sectors to be developed, namely:

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Aceh Gas Infrastructure Development Plan

One pipeline has been developed from Lhokseumawe (Aceh) to North Sumatra for gas supply in the Belawan Industrial Estate and cities along the pipeline.

Existing pipeline has been developed from Lhokseumawe (Aceh) to Sumatera Utara for supplying gast in Belawan Industrial Zone and City Gas through the pipeline. Now, about 10.000 household have been connected to the city gas system in North Aceh and East Aceh Regencies. Future pipeline infrastructure will be developed from Lhokseumawe – Banda Aceh – Meulaboh and west coast of Aceh. The Gas Infrastructure Development is included pipeline installations (construction of transmission pipes), land acquisition and accessories.

Gas Pipe Arun – Belawan.

  • Arun – Belawan pipe has capacity 300 MMSCFD and 350 Kilometers long with a total investment amounting to USD 586,04 Million.
  • PT. Pertamina Gas (Pertagas) has gas allocation for 185 Million Standart Cubic Feet Per Day (MMSCFD).
  • PT. Pertamina Gas (Pertagas) has gas allocation for 185 Million Standart Cubic Feet Per Day (MMSCFD).
  • In 2018 the fasilities supply 197 MMSCFD to PT. PLN to operate MVPP (Marine Vessel Power Plant) 240 M.
  • After gas pipe Arun – Belawan has been operated, Pertagas developed 120 kms gas pipe to supply gas for national industry in KIM untill KEK Sei Mangkei
  • Pipe gas Arun – Belawan tol fee = USD 2,53/MSCF.

Investment Opportunities.

  • Phase I: Lhokseumawe – Banda Aceh 230 km, requires approximately USD 380 million.
  • Phase II: Banda Aceh – Meulaboh 200 km, requires approximately USD 330,43 million.
  • Phase III: Meulaboh – Kota Fajar 250 km, requires approximately USD 413,043 million.
  • Regasification Facilities in Sabang (Weh Island) and Sinabang (Simeulue Island).