Province

North Sumatra

North Sumatra, a large salad bowl of people

North Sumatra, whose capital is Medan, ranks as the fourth most populous province in Indonesia, following West Java, East Java, and Central Java, with up to 15.1 million residents as of 2022. Rather than being a melting pot, the province is best described as a large bowl of salad, comprised of diverse ethnicities, cultures, and religions.

Ethnically diverse, North Sumatra is home to several indigenous groups. The Malay people reside along the east coast, while the Batak people inhabit the west coast and the central highlands region around Lake Toba. The Batak people are further categorized into six groups based on region, culture, and location: Pakpak, Angkola, and Mandailing on the west coast, and Toba, Simalungun, and Karo in the central highlands. Additionally, North Sumatra is home to the Nias people, who are natives of the Indian Ocean Island of Nias and its surrounding islets.

Residents of Chinese and South Asian descent together constitute a small but significant minority in North Sumatra, along with descendants of historical migrants from Java and migrants from other surrounding regions. These regions include the Minangkabau people of West Sumatra, the Palembang people of South Sumatra, and the Acehnese.

Furthermore, North Sumatra is home to a predominantly Muslim population, constituting over 60 percent of residents, followed by Christians (Protestant and Catholic) and Buddhists. Despite this great diversity, the province maintains generally harmonious inter-ethnic and inter-religious relations. However, at the same time, primordialism plays a role in both society and political life.

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North Sumatra’s economy, leading sectors

North Sumatra is one of the leading economies on the island of Sumatra, experiencing positive economic growth in recent years. For instance, in 2022, the province's economy expanded by 4.73 percent, a significant increase from 2.61 percent in 2021 and a notable recovery from -1.07 percent in 2020.

Several sectors are driving North Sumatra's economic growth: agriculture, trade, and construction.

As one of the country’s plantation centers, North Sumatra relies on key commodities such as palm oil, rubber, coffee, cocoa, and tobacco in its agriculture sector. Palm oil plantations owned by the people of North Sumatra are primarily concentrated in Asahan regency, accounting for over 15 percent of all palm oil plantations in the region, while coffee (robusta and arabica) is produced in the regencies of North Tapanuli, Simalungun, and Dairi.

Trade is also a key sector in North Sumatra’s economy, with the province exporting agricultural products like coffee, tea, and spices, as well as industrial products, specifically animal and vegetable fats and oils. As of 2022, the leading export commodity is vegetable fats and oils, reaching a significant export value of US$4.71 billion. Typically, these commodity exports from the province find their way to the Asian region, particularly China, as well as the United States. In terms of imports, North Sumatra's imports are predominantly raw/auxiliary materials, followed by capital goods and consumer goods.

Furthermore, North Sumatra's economy has increasingly relied on the non-trade sector, dominated by services, notably construction. North Sumatra’s Regional Gross Domestic Product (GRDP) in the construction sector has risen from Rp 64 trillion (US$4 billion) in 2018 to an estimated Rp 70 trillion (US$ 4.4 billion) in 2022. Moreover, the construction sector has become a major contributor to North Sumatra's employment industry.

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Latest News

March 20, 2025

North Sumatra's realized investments soared by around 104.56 percent year-on-year from about Rp39.05 trillion in 2023 to more than Rp48.27 trillion in 2024.

"The North Sumatra's investment realization in 2024 exceeded the 2024-2026 regional development plan (RPD)'s Rp40.35 trillion investment target by 119.63 percent," Acting North Sumatra Province Regional Secretary Effendy Pohan in Medan City, North Sumatra on Mar. 3, 2025 explained.

"The North Sumatra Province DPMPTSP (Investment and Integrated One-Stop Services Office) has prepared an investment and downstreaming program," he added.

A part of the program is the development of the Investment Facility Information System application. In addition, there is also guidance for companies in reporting investments through the investment activity report (LKPM), as well as supervision and resolution of obstacles faced by investors.

"The more efficient the licensing process, the higher the interest of investors to invest in our region," said Effendy.

Meanwhile, the Indonesian government has targeted the national investment realization to reach nearly Rp13.53 quadrillion for the 2025-2029 period. The target, if met, is expected to drive economic growth of up to 8 percent and create jobs for 3.74 million people.

Effendy hopes that investment realization in North Sumatra can continue to increase, which will require the active role of all North Sumatra Provincial Government civil servant.

"[We must] continue to improve professionalism, discipline, and work ethic in supporting the achievement of regional development targets," he concluded.

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