Government Prepares New Infrastructure Funding Scheme for Regions
REPUBLIKA.CO.ID, JAKARTA – The Ministry of Economic Affairs has introduced a Land Value Capture (LVC) funding scheme, also known as Pengelolaan Perolehan Peningkatan Nilai Kawasan (P3NK), as a proactive measure against regional fiscal limitations. The initiative is expected to enhance regional financial autonomy.
Acting Deputy for Industry, Labour, and Tourism at the Ministry of Economic Affairs, Dida Gardera, stated that the move was formalised through the dissemination of Ministerial Coordinating Regulation No. 3 of 2026, which serves as a national guideline to accelerate regional development.
Under the P3NK scheme, local governments can capture and reuse part of the increased land value generated by infrastructure projects. This new sustainable revenue will then be reinvested into other public facility projects, fostering cross-regional financial independence.
‘LVC financing schemes can serve as an alternative solution amid government fiscal constraints. The P3NK mechanism leverages land value as a source of infrastructure funding. This approach not only benefits communities but also generates sustainable new funding sources,’ said Dida in a statement, cited on Wednesday (27 May 2026).
‘Generally, P3NK operates in a cycle beginning with planning, value creation, value capture, and finally reinvestment as funding,’ Dida explained.
P3NK is an alternative financing scheme outside the national budget (APBN) and regional budget (APBD), which can be implemented using various institutional structures based on local government conditions, such as Regional Work Units (SKPD), Technical Implementation Units/Public Service Agencies (UPTD/BLUD), or Regional-Owned Enterprises (BUMD).
Dida added that most investment and development projects are located in regions, giving local governments a strategic role in driving national economic growth. This role includes fostering a conducive investment climate, preparing investable projects, and promoting innovative financing and collaboration with the private sector.
‘Additionally, regions are encouraged to become new sources of economic growth to prevent national growth from being concentrated in specific areas. Increased regional investment is expected to create a multiplier effect, including job creation, growth in business activity, and strengthened local economies,’ she said.
She emphasised that the LVC awareness campaigns aim to prepare local governments to understand, adopt, and implement the scheme effectively.
‘We hope local governments will begin identifying potential pilot projects in their areas to be followed up with the Ministry of Economic Affairs as part of efforts to introduce innovative and sustainable infrastructure financing,’ she concluded.