Airlangga Issues Regulations on New Infrastructure Funding Scheme

Jakarta, CNBC Indonesia - Economic Coordination Minister Airlangga Hartarto has issued regulations on the Infrastructure Funding Scheme through Land Value Capture (LVC), locally known as Pengelolaan Perolehan Peningkatan Nilai Kawasan (P3NK). This strategic move is formalised through the socialisation of Ministerial Regulation No. 3 of 2026, which serves as a national guideline to accelerate regional development. To address local fiscal constraints, the government has officially introduced the Infrastructure Funding Scheme via Land Value Capture (LVC), referred to in Indonesia as P3NK. Under the P3NK scheme, local governments can capture and reuse part of the increased land value generated from infrastructure projects. This new sustainable revenue will be reinvested in other public facilities, fostering inter-regional financial independence. “LVC funding schemes offer an alternative solution to government fiscal constraints. The P3NK framework leverages land value as a source of infrastructure financing, ensuring development not only benefits communities but also generates sustainable funding sources,” said Acting Deputy for Industry, Labour, and Tourism at the Coordinating Ministry for Economic Affairs Dida Gardera, quoted on Friday, 29 May 2026. Generally, P3NK operates in a cycle beginning with planning, followed by value creation, then value capture, and finally reinvestment as funding. With clear implementation guidelines under Ministerial Regulation No. 3 of 2026, local governments now have a stronger operational basis for applying area-based funding. P3NK is an alternative financing scheme outside the national and regional budgets, with implementation using various management entities based on local government conditions, such as SKPD, UPTD/BLUD, or BUMD. He noted that most investment and development projects are located in regions, making local governments strategically vital for driving national economic growth. This role includes fostering a conducive investment climate, preparing bankable projects, and promoting innovative financing and public-private collaboration. “Furthermore, regions are encouraged to become new economic growth engines to prevent national growth from being concentrated in specific areas. Increased regional investment is expected to generate multiplier effects such as job creation, business activity growth, and strengthened local economies,” Dida explained.