National Strategic Projects (, abbreviated PSN) are Indonesian infrastructure projects which are designated as strategic in increasing economic growth, equitable development, community welfare and regional development. It was established during the administration of President Joko Widodo. PSN is regulated through a presidential regulation, while project implementation is carried out directly by the central government, regional government, and/or business entities as well as Government-Enterprise Cooperation, prioritizing the use of domestic components.https://www.djkn.kemenkeu.go.id/kanwil-jabar/baca-artikel/15970/Proyek-Strategis-Nasional-Dari-Kita-Untuk-Bangsa.html
PSNs are required to fulfill elements of basic, strategic, and operational criteria. The basic criteria is such that the project conforms with the National/Regional Medium Term Development Plan along with the strategic plan for the infrastructure sector, as well as conforming with the Spatial and Regional Plan as long as it does not disrupt green open spaces. Strategic criteria refers to the benefits of the project for the economy, social welfare, defense, national security, as well as connectivity and distribution diversity between islands.https://kppip.go.id/proyek-strategis-nasional/ Since its launch in 2016, 92 National Strategic Projects have been completed with an investment value of Rp 467.4 trillion. The number of completed projects is equivalent to 41% of the total 223 projects contained in Presidential Regulation No. 56 of 2018. In terms of investment value, the contribution reached 11.4% of the total project investment of Rp 4,092 trillion. On the other hand, the National Strategic Project has also received various criticisms, such as negative cash flows experienced by state-owned enterprises (BUMN) due to assignments by the government and environmental issues. Apart from that, PSN also faces obstacles in terms of land acquisition, planning and preparation, funding, licensing and construction implementation.
Background Due to the 1998 economic crisis, Indonesia has seen the absence of large-scale infrastructure development, as can be seen from the infrastructure budget which fell from 9% of GDP in the mid-1990s to 2% in 2001. In 1998, Indonesia's infrastructure availability reached 49% of Gross Domestic Product, then shrank to 32% in 2012, then in 2015 to 35% and managed to increase again to 43% in early 2019. Minister of National Development Planning of Indonesia/Head of the Development Planning Agency Nationally(Bappenas) for the 2016-2019 period, Bambang Brodjonegoro assessed that Indonesia needs to catch up with the average standard of infrastructure availability in developed countries which reaches 70%, such as China and India whose infrastructure stock has reached 76% and 57%, including catching up with South Africa which has domestic products. Its gross is below Indonesia, but its infrastructure availability has reached 87%.
According to Bappenas, to improve Indonesia's lagging infrastructure capacity, the country needs large amounts of investment in this sector, namely Rp4,796.2 trillion during the 2015-2019 period. 41.3% or Rp1,978.6 trillion was contributed by the State Revenue and Expenditure Budget (APBN) and Regional Revenue and Expenditure Budget (APBD), then 22.2% or Rp1,066.2 trillion came from State-Owned Enterprises (BUMN), and the remaining 36.5% or Rp1,751.5 trillion came from the private sector. The need for investment funds is projected to increase again to Rp 6,445 trillion for the 2019-2024 period, with the largest contribution expected to come from the private sector, namely 42%, followed by the APBN at 37%, and BUMN by 21%.
The National Strategic Project aims to quickly improve the quality and availability (stock) of Indonesia's infrastructure, so as to increase the efficiency and productivity of the national economy. In the 2015-2019 National Medium Term Development Plan, one of the main problems and challenges facing the Indonesian economy is the limited availability of infrastructure to support increased economic progress. Limited infrastructure stock also creates obstacles in increasing investment, expensive logistics costs, and creates disparities between regions. The World Bank estimates that poor quality infrastructure has contributed to reduced economic growth by 1% since 2014. The National Strategic Project is also directed and adapted to the National Medium Term Development Plan 2015-2019 which emphasizes the objectives of improving infrastructure to increase national connectivity, providing basic infrastructure such as drinking water and sanitation, electricity infrastructure, ensuring water, food and energy security and developing urban mass transportation system.
Legal basis
Initiation PSNs were first established by the president Joko Widodo on 8 January 2016 through Presidential Regulation of the Republic of Indonesia No. 3 of 2016 concerning the Acceleration of Implementation of National Strategic Projects. The complexity of licensing and non-licensing issues in the development of infrastructure projects is attempted to be resolved through this presidential decree, through the One-Stop Integrated Service (PTSP) that was coordinated by Investment Coordinating Board (BKPM) where the licensing in the central will be handled at the Central One-Stop Integrated Service, while in the regions it is handled by provincial, district or city PTSP.
To support its establishment, the regulation is backed by Presidential Instruction Number 1 of 2016, which instructs government bodies and ministries to support the acceleration of the implementation of the PSN. Though the regulation was published on 2016, the criteria for eligibility of the project is already decided in coordinated meeting on 10 September 2015. The criteria is consisted of three criteria such as basic criteria, operational criteria and strategical criteria. The basic criteria further include compliance with the National and Regional Mid-Term Development Plans, strategic plans for the infrastructure sector, and compliance with the Spatial Planning and Zoning Plan (Rencana Tata Ruang dan Wilayah) as long as it does not alter the Green Open Space. On the other hand, strategic criteria consist of having a strategic role in the economy, social welfare, and national defense and security (measured by contributions to GDP/GRDP, labor absorption, socio-economic impacts, and environmental effects); demonstrating strong linkages across infrastructure sectors and between regions, creating complementary effects; and promoting balanced development across islands, specifically addressing the balance between the western and eastern regions of Indonesia. At the last, operational criteria consist of that the new proposed projects must have a Pre-Feasibility Study and the project investment needs to have value exceeds IDR 100 billion or plays a strategic role in boosting regional economic growth.
Implementation A principle permit from the BKPM is required to be issued within one day after being submitted. Then BKPM through PTSP is also obliged to process and complete licensing and non-licensing processes no later than 5 days, such as location permits, building construction permits, except for environmental permits (60 days), forest area borrow-to-use permits (30 days), and fiscal facilities and non-fiscal (28 days). Business Entities are also not required to obtain location permits if they have obtained land rights and permits to borrow forest areas. The designation of National Strategic Projects can be altered based on studies conducted by the Committee for the Acceleration of Priority Infrastructure Provision (KPPIP).
A new project proposal, intended to be a part of the National Strategic Projects (PSN), is submitted to the Committee for the Acceleration of Priority Infrastructure Provision. The committee will filter the proposals based on several criteria, including project requirements, benefits, the connection between the proposed project and existing completed infrastructure, and the project's deadline. The results of this filtering process are then discussed in a limited meeting with the Coordinating Minister for Economic Affairs. Finally, the project is implemented after the issuance of a Presidential Regulation.
Criticism However, this regulation received criticisms, since if there are deviations or abuse of authority in the implementation of National Strategic Projects, resolution is carried out by prioritizing government administration processes.
Regulation Government Decree No. 42 of 2021 concerning Facilitation of National Strategic ProjectsPeraturan Pemerintah Nomor 42 Tahun 2021 tentang Kemudahan Proyek Strategis Nasional Presidential Decree No. 82 of 2015 concerning Central Government Guarantees for Infrastructure Financing through Direct Loans from International Financial Institutions to State-Owned Enterprises Presidential Decree No. 38 of 2015 concerning Government Cooperation with Business Entities in Providing Infrastructure Presidential Decree No. 30 of 2015 concerning Land Acquisition for Development in the Public Interest Presidential Decree No. 117 of 2015 concerning Amendments to Presidential Regulation No. 100 of 2014 concerning the Acceleration of Toll Road Development in Sumatra Presidential Decree No. 146 of 2015 concerning the Implementation of Domestic Oil Refinery Construction and Expansion. Presidential Decree No 82 of 2015 concerning Central Government Guarantees for Infrastructure Financing through Direct Loans from International Financial Institutions to BUMN Presidential Decree No. 56 of 2017 concerning Handling Social Impacts in the Context of Providing Land for National Strategic Projects Presidential Decree No. 66 of 2020 concerning Funding for Land Acquisition for Development in the Public Interest in the Context of Implementing National Strategic ProjectsPeraturan Presiden Nomor 66 Tahun 2020 tentang Pendanaan Pengadaan Tanah Bagi Pembangunan Untuk Kepentingan Umum Dalam Rangka Pelaksanaan Proyek Strategis Nasional Minister of Finance Decree No 232/PMK.06/2015 concerning Implementation of the Transfer of Government Investment in the Government Investment Center to State Capital Participation in PT Sarana Multi Infrastruktur Minister of Finance Decree No 189/PMK.08/2015 concerning Procedures for Providing and Implementing Government Guarantees for Infrastructure Financing through Direct Loans from International Financial Institutions Minister of Finance Decree No 190/PMK.08/2015 concerning Payments for Service Availability in the Context of Government Cooperation with Business Entities in Providing Infrastructure
Projects The number of PSNs recorded every year continues to change, either because the previous year's projects have been completed, projects have been removed from the list, or new projects have been added. Since it was first included in Presidential Regulation of the Republic of Indonesia No. 3 of 2016 concerning the Acceleration of Implementation of National Strategic Projects, the number of National Strategic Projects has reached 225 projects and 1 program.
Then in Presidential Regulation of the Republic of Indonesia No. 58 of 2017, the number of projects increased to 245 PSNs and 3 Programs. In this Presidential Decree, there are 55 new projects and one aircraft industry program. Meanwhile, in 2018 there were 223 PSNs and 3 National Programs, as stated in the Presidential Regulation of the Republic of Indonesia No. 56 of 2018, which was signed on 20 July 2018.
In nominal terms, a total of 245 PSNs and 2 programs with total investment reached US$ 327.2 billion or Rp. 4,417 trillion. Meanwhile, the total value of National Strategic Projects for 2018 reached IDR 4,183 trillion. All National Strategic Projects are divided into 15 sectors and 2 programs. Controversy