Bappenas, Finance Ministry & LKPP Launches KPBU Scheme for IKN Development

JAKARTA – The Ministry of National Development Planning/Bappenas, together with the Ministry of Finance and the Agency of Goods & Services Procurement (LKPP), carried out information distribution regarding several regulations that form the legal basis for implementing the Government-Business Entity Cooperation Scheme (KPBU) on the construction of the Nusantara Capital City project (IKN).

The Ministry of National Development Planning/Bappenas had previously issued Bappenas Regulation no.6/2022 on Procedures for Implementing Cooperation between the Government and Business Entities in the IKN Project. This regulation operates under Government Regulation no.17/2022 on Funding and Budget Management regarding the Preparation, Development, and Relocation of the National Capital City and the Administration of the Nusantara Capital City.

“For projects using the KPBU scheme, we currently have three projects that are ongoing for public servant & defense worker housing worth Rp 41 trillion which can become an example for other business actors. It is for this reason that we hope this activity will further increase confidence in the development of the Nusantara Capital City as expected by the President,” said Bappenas’ Deputy of Development Funding Scenaider Clasein Hasudungan Siahaan on Thursday (9/2).

The issuance of this implementing regulation simultaneously carries out the directives outlined by President Joko Widodo in his State of the Union address, which emphasized that 80% of IKN funding should come from private investment and only the Central Government Core Area (KIPP) of the city would be built using government funds. This funding scheme has been stipulated in Regulation no. 3/2022 on the Nusantara Capital City project, as well as Regulation no. 17/2022 on the Preparation, Development, and Relocation of the National Capital City and the Administration of the Nusantara Capital City.

Deputy Scenaider emphasized that Bappenas Regulation no.6/2022 stipulates that both government and business entities will equally benefit from the provision of sustainable and profitable public infrastructure in the new Capital City, considering the risk-sharing agreement agreed upon by both sides.

The risk-sharing agreement refers to the principles originally drafted out of the regulation, namely the realization of accelerating the provision and construction of IKN infrastructure using a simpler, faster, safer, and more cost-efficient process while promoting both accountability and transparency.

Apart from the ongoing KPBU scheme, funding sources for the IKN’s development should also include creative financing schemes that can help maximize the participation of the private sector and attract other non-government funding sources. It is underlined that the involvement of the private sector in the financing of the IKN’s development should be done under the terms of good governance and must provide certainty of returns on investments in an accountable, fair, transparent manner.