National strategic project: An abundance of incentives ready to be disbursed in IKN
This article has been translated by PwC Indonesia as part of our Indonesia Infrastructure News Service. PwC Indonesia has not checked the accuracy of, and accepts no responsibility for the content.
Bisnis Indonesia - Proyek strategis nasional: Banjir insentif siap mengucur di IKN
21 February 2023
By: Muhammad Ridwan and Hendra Wibawa
Jakarta - Nusantara Capital City Authority predicts that incentives in Nusantara Capital City (IKN) will heavily flow to investors after the issuance of the government regulation on national strategic project incentives.
Nusantara Capital City Authority Chairperson Bambang Susantono explained that the government regulation on IKN investment incentives would be issued this month.
He explained that the government regulation draft on IKN investment incentives had been signed by all related ministries.
“[It will be issued] this month. Everyone has signed. It contains incentives, tax holiday, and super tax reduction. Some of the incentives are the same as [incentives for] special economic zones (KEKs),” he said in Jakarta on Monday (20/2).
Investment Ministry/BKPM has promised to provide more interesting incentives for investors to provide certainty in IKN. One of the incentives is tax holiday that will be provided for investors in the infrastructure and public services sector with an investment value of around Rp5 billion to Rp10 billion. In the early stage, tax holiday will be provided for 30 years.
Next, the government will provide tax holiday in the economic facility sector, such as shopping centres, for 20 years.
Meanwhile, research and development activities in certain sectors in IKN will receive an incentive in the form of a 350% tax deduction.
Bambang stated that IKN development in East Kalimantan had progressed massively. He added that IKN project was also proven to boost the production of local micro, small, and medium enterprises (MSMEs), so their revenue also increased.
“It has been proven that IKN construction can increase the revenue of MSMEs. This is what we want. Real proof that Nusantara construction brings positive impact to the economy and that it is felt by the people around IKN,” he said as quoted by Antara.
He continued that IKN construction would continue to progress excellently in accordance with the plan, so the economic impact would be increasingly felt. Moreover, he predicts that the impact of the project could increase to impact not only the people around Nusantara, but also Kalimantan.
This is in line with the construction purpose of Nusantara in Kalimantan, which is to realise economic equality and to make Indonesia included in the list of high-income countries.
On a separate occasion, East Kalimantan Capital Investment and One Stop Service (DPMPTSP) Agency Head Puguh Harjanto said that East Kalimantan Provincial Government would maximise investment opportunities with the presence of IKN in the region.
“The government must be able to seize this non-coal economic investment opportunity as investment opportunities are wide open in IKN,” Puguh said in his official statement.
Puguh revealed that investment realisation in East Kalimantan Province in 2022 surged past the set target. Based on East Kalimantan DPMPTSP records, investment realisation from January to December 2022 reached Rp57.75 trillion or 106.97% of the target of Rp54 trillion, which is the highest in the last 5 years.
“We want to thank all parties for their extraordinary synergy in 2022. Challenges in 2023 include downstreaming and MSME collaboration, which are continuously focused on by East Kalimantan in our investment policy,” Puguh said.
He encourages all parties in East Kalimantan to be ready for the change.
Puguh said that many parties were looking for their position in IKN in East Kalimantan, such as Malaysia that had visited East Kalimantan five times.
“They can simply invest in East Kalimantan, the location for bread production. We cannot lose in fulfilling the needs of the people in East Kalimantan,” he revealed.
Building tender
Meanwhile, the Public Works and Housing (PUPR) Mininistry is opening a tender for the construction of a coordinating ministry office in IKN.
As announced on the PUPR Ministry’s electronic procurement service system (LPSE) page on Monday (20/2), the tender for the construction of Coordinating Ministry Building and Office Area 2 is one of the four coordinating ministry buildings that will be constructed in IKN.
The building is currently in the initial transfer stage. Later, it will function as a joint office for ministries.
The tender for the coordinating ministry building and office area is worth Rp791.73 billion with a self-estimated price of Rp791.73 billion, which has been opened since Monday (20/2).
Coordinating Ministry Building and Office Area 2 includes building construction and area organisation that will take 510 calendar days. The building will realise the work transformation concept that will be implemented in IKN as a new way of working.
