Government Relies on Land Value Capture to Pursue 8 Percent Growth

Jakarta - The government is promoting the Land Value Capture (LVC) scheme, known locally as Pengelolaan Perolehan Peningkatan Nilai Kawasan (P3NK), as an alternative for infrastructure financing amid fiscal limitations. “Infrastructure development is a primary requirement to achieve the 8 percent economic growth target by 2029. To reach this target, we need innovative alternative financing such as P3NK,” said Dida Gardera, Acting Deputy for Industry, Manpower, and Tourism Coordination at the Coordinating Ministry for Economic Affairs, in Jakarta on Wednesday. “This scheme is not a burden for business actors, but rather a collaborative ecosystem to share the benefits of increased area value,” he added. During a discussion forum with PricewaterhouseCoopers (PwC), Dida stated that his office is working to build a more comprehensive understanding of the P3NK scheme while encouraging the active involvement of the business community, financing institutions, and regional governments in identifying opportunities for its implementation. The government is also continuing to promote private sector participation by providing policy and regulatory certainty, designing attractive incentive and benefit-sharing schemes, and simplifying the licensing process. Collaboration between the government and business actors is considered a critical factor in the successful implementation of P3NK, as has been applied in various countries. “P3NK is a policy innovation that opens new opportunities in infrastructure development financing in Indonesia. However, we must understand that the success of P3NK depends not only on regulation, but on our courage to build collaboration and begin implementation,” Dida stated. Through this approach, infrastructure development is expected to create an increase in area value, which will ultimately improve public services and drive regional economic growth.