New Toll Road Improves Connectivity in North Sumatra Growth Center

The city of Medan in North Sumatra is the biggest city on Sumatra and the third-biggest metropolitan area in Indonesia, hence it forms a key economic growth center for the island itself and country. Around the city of Medan there exists an industrial area as well as the Kualanamu International Airport (which was opened in mid-2013).

Further to the east of Medan there is the Kuala Tanjung port project, set to become one of Indonesia's international hubs, involving the development of a multipurpose terminal, an industrial area, and a container port as well as residential area. This big port project will be developed in several phases.

A bit further to the east there is the Sei Mangke Special Economic Zone, launched by Widodo in early 2015. The main focus of this special economic zone is the palm oil and rubber industry (Sumatra being a major contributor to Indonesia's palm oil and rubber production), including supporting industries. The main products produced at this zone are fatty acid, fatty alcohol, surfactant, biodiesel, and biogas.

Lastly, somewhat to the south, there is Lake Toba, an important tourist destination. The government is eager to attract private investment to develop tourist attractions, supporting infrastructure, and property around this lake in order to turn the area into a world-class tourist destination.

The realization of the Medan-Kualanamu-Tebing Tinggi toll road, the artery that connects all these above-mentioned designated growth centers, is crucial for the government's ambitious plans in North Sumatra. For example, travel time from the Kualanamu International Airport to Lake Toba will be cut from up to five hours previously to only two hours, a significant improvement (meanwhile, the government also plans to turn the Silangit Airport - currently a relatively small airport located to the south of Lake Toba - into an international airport to increase the ease of traveling to Lake Toba).

Last week, Widodo also inaugurated the 10.46-kilometer Helvatia-Sei Semayang-Binjai section in North Sumatra, which is part of the Medan-Binjai toll road.

Infrastructure development is placed high on the agenda of the Indonesian government as businesses and people in Southeast Asia's largest economy are plagued by high logistics costs due to the lack in quality and quantity of infrastructure. This situation undermines the competitiveness of Indonesian businesses, while it also causes social problems (for instance access to healthcare is limited in the more remote regions of the country).

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