President Jokowi Establishes Funding Rules For The Capital Of The Archipelago

JAKARTA - President Joko Widodo has signed RI Government Regulation No. 17 of 2022 concerning Funding and Budget Management for the Preparation, Development, and Relocation of the State Capital and the Implementation of the Regional Government for the Special Capital of the Archipelago.

"The funding scheme for the Capital of the Archipelago can be sourced from the State Budget and other legitimate sources, including the use of State Property (BMN) and/or the use of Assets in Concession (ADP) of the Archipelago Capital Authority, the use of the Government and Business Entity Cooperation scheme. PPP), and the participation of other parties, including the assignment of business entities whose capital is partly or wholly owned by the state, strengthening the role of state-owned legal entities, and creative financing. , Wednesday, May 4th.

PP No. 17 of 2022 was signed by President Jokowi on April 18, 2022.

In addition, funding schemes can come from other legal sources in accordance with the provisions of the legislation, including funding schemes originating from private contributions, creative financing, and the IKN Special Tax and/or IKN Special Fees that are set. with the Regulation of the Archipelago Capital Authority after obtaining the approval of the DPR RI

In article 4 of the PP, it is regulated in detail what the sources of funding for IKN development are, namely:

1. Funding sourced from state securities which include State Sharia Securities (SBSN) and Government Securities (paragraphs 3 and 4)

2. Utilization of BMN and/or utilization of ADP (paragraph 5 letter a number 1)

3. Use of the IKN Government and Business Entity Cooperation (PPP) scheme (paragraph 5 letter a number 2)

4. The participation of other parties, including the assignment of business entities whose capital is partly or wholly owned by the state; strengthening the role of state-owned legal entities; and creative financing (paragraph 5 letter a number 3)

5. private contribution (paragraph 6 letter a number 1)

6. Creative financing other than those referred to in paragraph 5 letter a number 3

7. Special IKN tax and/or IKN Special levy after obtaining approval from the DPR (paragraph 6 letter a number 3)

The implementation of the IKN funding scheme sourced from the APBN in the form of SUN is carried out in accordance with the provisions of the legislation (article 4 paragraph 7)

Meanwhile, the implementation of creative financing is determined by the minister after coordinating with the ministry that carries out government affairs in the field of national development planning, ministries/institutions, and/or the IKN Authority.

Furthermore, the IKN Authority may also issue Bonds and/or Government Sukuk for the Special Capital Region of the Archipelago (article 5 paragraph 1).

"Issuance of Special Regional Government Bonds and/or Sukuk IKN is carried out with the approval of the minister and based on the provisions of the laws and regulations," it is stated in the regulation.

Furthermore, Article 43 regulates the types of IKN Special Taxes that can be collected by the IKN Authority, which consist of:

a. Vehicle tax;

b. Duty on Transfer of Motor Vehicle Names;

c. Heavy Equipment Tax;

d. Motor Vehicle Fuel Tax;

e. Surface Water Tax;

f. Cigarette Tax;

g. Rural and Urban Land and Building Tax;

h. Fee for the Acquisition of Rights on Land and Buildings;

i. Certain Goods and Services Tax on:

1. Food and/or Beverage;

2. Electric Power;

3. Hospitality Services;

4. Parking Services; and

5. Arts and Entertainment Services.

j. Advertisement tax;

k. Groundwater Tax;

L Tax on Non-Metal Minerals and Rocks; and

m. Swallow's Nest Tax.

Article 7 stipulates that the period of preparation, development, and transfer of IKN is set as a national priority program for a minimum of 10 years in the government's work plan from 2022 or at least until the completion of stage 3 of the stages of IKN development.

Phase III of IKN development is in the period 2030-2034.

The government estimates that the total budget requirement for IKN will reach Rp. 466 trillion, which will be met through the State Budget of Rp. 89.4 trillion, Rp. 253.4 trillion from government and business entity cooperation (KPBU) and Rp. 123.2 trillion from the private sector.