MP3EI - Bab 4

Masterplan P3EI The Implementation & Governance of MP3EI

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4The Implementation & Governance of MP3EI

The function of coordination, control,

monitoring, and evaluation is the key to

successful implementation of MP3EI. For that,

the mechanism and structure of the strategic

unit entrusted with the responsibility to carry

out these functions are formulated.

A. Implementation Stage

MP3EI is a long term plan for the economic development of Indonesia. A gradual but continuous implementation is a key factor to the success of MP3EI. The implementation of MP3EI is planned in three phases up to year 2025, as follows: 4

As illustrated in Figure 4.1, each phase has a different focus. Phase 1 (2011 – 2015) will focus on theimplementation of MP3EI and the operationalization of the MP3EI implementation committee. The MP3EIimplementation committee will prepare action plans for debottlenecking of various pending regulations,licenses, incentives, as well as commencing the investment commitment (quick-wins). National connectivitywill be strengthened in this phase by assigning primary seaports and airports as international hubs in westernand eastern Indonesia. Human resources development, research facilities, and research activities will befurther developed as a starting point to increase the contribution of research and technology in supportingthe development of main economic activities in every corridor.

On a shorter term, MP3EI will be focusing on the implementation of various action plans which should becompleted by 2014. These action plans will ensure that initiative strategies are well implemented to accelerateand expand the economic development in the coming phases. The establishment and operationalization of aMP3EI Implementation Committee need to be prioritized along with the streamlining of various regulationsand accomplishing various investment projects in main economic activities by all related stakeholders.

Phase 2 (2016 – 2020) will focus on the acceleration of long term infrastructure development, enhancement of innovation to improve competitiveness, improvement of economic governance in various fields, and encouragement of industry which will create added value.

Phase 3 (2021 – 2025) will focus on the enhancement of national industries to compete globally, as well asthe implementation of high level technologies to achieve sustainable development.

Figure 4.1 Implementation Phases of MP3EI

Phase 1: Quick-wins Implementation

Phase 2: Strengthen Economic & Investment Bases

Phase 3: Sustainable Growth Implementation

• To establish and function MP3EI committee• Preparing Action Plans regarding

regulations, debottlenecking, permits, incentives, infrastructure development and implementation of investment commitments (quick-wins)

• The establishment of International hubs: seaports and airports

• Strengthening research and development institutions in every corridor

• Human resource development for the corridor’s main economic activities

• Accelerate the development of long-term infrastructure projects

• Strengthen the innovation ability to increase competitiveness of main economic activities

• Improve economic governance in various fields

• Expand the development of industries creating added value

• Maintaining sustainable national competitiveness

• Expanding high-technology adaptation for future sustainable development

2011 2015 2020 2025


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The Implementation & Governance of MP3EI

B. Improvement of Regulations and Permits

To attain the acceleration and expansion of the economic development in Indonesia, infrastructure and non–infrastructure development is needed. The implementation, establishment, and improvement of regulations and permits at the regional and national levels are the keys to success for MP3EI.

At the national level, improving cross sector regulations and streamlining permit applications are needed,especially those relating to spatial management, labor, taxation, and the ease of capital investment in Indonesia. At the local level, regulation and permit improvements are needed, especially those concerning the mineral and coal, forestry, and transportation (railways, shipping, aviation) sectors, as well as basic infrastructure.

Regulation and permit improvements should be implemented in order to achieve general objectives as follows:1. Accelerate the completion of law implementation regulation;2. Eliminate the overlap between existing regulations, both at the central and local government levels as well as

among sectors and institutions;3. Revise and establish required regulations to support MP3EI (such as export tax for several commodities);4. Provide incentives for main economic activities that is consistent with MP3EI strategies;5. Accelerate and simplify the process of issuing permits.

Table 4.1, Table 4.2, Table 4.3, Table 4.4 show several pending regulations, incentives, and permits which wereidentified during the preparation of MP3EI. The lists of regulations and permits is subject to change during thedevelopment of action plans.

National Regulations and Permits

The following table shows a list of national regulations and permits which must be revised to support the development of main economic activities:

Table 4.1 List of Laws

No Laws Responsible Institutions Time Target

1 Review Law and Government Regulations related to the application of communal land (tanah ulayat) as an investment component which will enable the land owners to gain higher economic benefits. (this review is needed to support the MIFEE program).

National Land Agency, Ministry of Forestry, Ministry of Home Affairs

December 2011

2 Revise Law No. 13 Year 2003 regarding Man Power → related to articles about employment contract, outsourcing, and severance pay.

Ministry of Manpower and Transmigration

January 2012

3 Revise Law No. 28 Year 2009 regarding Regional Tax and Retribution. Ministry of Finance, Ministry of Home Affairs

December 2011

4 Revise Law No. 4 Year 2009 on Mineral and Coal Mining regarding business uncertainty →business permits are usually given for a certain period of time (20+10+10 years), mechanisms to change a contract status from The Coal Mining Rights Agreement (Perjanjian Karya Pengusahaan Pertambangan Batubara/PKP2B) and working contracts to a business permit.

Note: Judicial review of Law No. 4 Year 2009 is being proposed to the Constitutional Court

Ministry of Energy and Mineral Resources

December 2011

5 Review Law No. 22 Year 2001 on Oil and Gas → Simplification of business patterns, mechanisms of the lex specialist for the application of taxation, the clarity of the national oil reserves asset management.

Note: change of oil and gas mind set from revenue based to economic growth based


December 2011

6 In line with Law No. 1 Year 2009 on Aviation and Law No. 17 Year 2008 on Shipping, the separation between regulatory functions (Airport/Port Authority) and operating functions (Enterprise) has to be accelerated. In addition, based on the Law No. 23 Year 2007 on Railways, it is mandated that the Provider of Infrastructure and Rolling Stocks in Railways must be separated.

Ministry of Transportation December 2011

7 Revise Law No. 30 Year 2009 on Electricity to improve private sector participation in providing electricity. This revision is also needed to regulate the development of Renewable Energy (Energi Baru dan Terbarukan/EBT).


December 2011


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Table 4.3 List of Presidential Regulations (Perpres), Presidential Decree (Keppres), Presidential Instruction (Inpres)

No Presidential Regulations (Perpres), Presidential Decrees (Keppres), Presidential Instructions (Inpres) Responsible Institutions Time Target

1 Issue Presidential Regulation following the revision of The Joint Ministries Decree regarding PSO, IMO and TAC of Railways.

Ministry of Transportation, The Ministry of National Development Planning, Ministry of Finance

December 2011

2 Revise Presidential Regulation No. 13 Year 2010 Concerning Government and Private Partnership in the Provision of Infrastructure.

The Coordinating Ministry for Economic Affairs, Ministry of Finance, Ministry of National Development Planning, Indonesia Investment Coordinating Board

July 2011

3 Issue Presidential Decree on the Establishment of Indonesian Tourism Promotion Board (BPPI) as it is mandated by Law No. 10 Year 2009 on Tourism.

Ministry of Culture and Tourism

May 2011

4 Issue regulations regarding Forestry Moratorium. The Coordinating Ministry for Economic Affairs, Cabinet Secretariat

July 2011

5 Issue regulations to encourage infrastructure development in the eastern part of Indonesia. Ministry of Public Work, Ministry of Transportation

December 2011

No Government Regulation Responsible Institutions Time Target

1 Revise Government Regulation No. 38 Year 2003. Tax Exemption for Imported Raw Material to be utilized in Defense Equipment Industries (originally exemption is given for ammunition, and weapon, and it is proposed to be extended to include ammunition, weapon, combat vehicles, aircraft, radar, ships, and optical equipment).

Ministry of Finance December 2011

2 Revise Government Regulation No. 18 jo. PP No. 85 Year 1995 which is to be harmonized with Law No. 32 Year 2009 on Environmental Management which distinguishes B3 waste (Toxic and Hazardous Materials) with special waste in order to facilitate the utilization of industrial wastes by industries as well as by waste producing industries in order to improve the competitiveness of domestic industries.

Ministry of Environment July 2011

3 Revise Government Regulation No. 69 Year 1999 on Food Labeling and Advertising related to the labeling of goods and packages in Indonesian language.

Ministry of Trade, Drug and Food Regulatory Agency

December 2011

4 Revise Government Regulation No. 62 Year 2008 on the Amendment of Government Regulation No. 1 Year 2007 concerning income tax facilities for investment “in specific sectors and or in specific areas” → the establishment of new sub-sectors according to the MP3EI priority which is worth to receive tax allowances (such as, the IRR for Coal Bed Methane gas will not be attractive without any incentives given).


5 Revise PP No. 68 Year 1998 on Nature Conservation Area and Nature Reserve Area and followed by issuing Perpres regarding underground mining in order to increase geothermal investment.

Ministry of Forestry, Cabinet Secretariat

December 2011

6 Acceleration of draft of Government Regulation for Master Plan of National Tourism Development (Riparnas) 2010-2025.

Ministry of Culture and Tourism

June 2011

7 Prepare technical guidelines under The Ministry of Finance’s regulation to implement the Government Regulation No. 35 Year 2007 on Allocation of Enterprise Revenue in order to Improve Engineering, Innovation, and Diffusion Technology Capability Technical criteria and establishment governance need to be formulated and agreed by all shareholders.

Ministry of Finance, State Ministry of Research and Technology

December 2011

Table 4.2 List of Government Regulation


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Table 4.4 List of Ministerial Regulations

No Ministerial Regulations Responsible Institutions Time Target

1 Review Ministry of Finance Regulation (PMK) 67/10 regarding the stipulation of Export Duty for export commodities as well as refund mechanism for the development of relevant sectors through DIPA mechanism. Particularly related to the application of progressive Export Duty for Palm, Rubber, Cocoa, including its derivative industries (e.g. biodiesel industry); and integrated Value-Added Tax in order to avoid double taxation.

Ministry of Finance and Ministry of Trade

August 2011

2 Issue regulations regarding the implementation of DMO for coal, oil and gas supporting the downstream industries for rubber, oil palm, cocoa, and steel.

Ministry of Energy and Mineral Resources, Ministry of Agriculture

December 2011

3 Issue a technical regulation (Ministry of Finance Regulation) on the types of industries which are eligible for tax holiday (based on Government Regulation No. 94 Year 2010 regarding the Calculation of Taxable Income and Income Tax Payment in the Current Year).

Ministry of Finance August 2011

4 Issue technical regulation regarding the development and cultivation of Genetically Modified Organisms (GMO) for food crops and plantations (as the elaboration of Government Regulation No. 21 Year 2005 on Biosafety Genetically Engineered Products).

Ministry of Agriculture and Ministry of Environment

October 2011

5 Issue regulations regarding incentive/facilitation to accelerate investment in centers of agricultural production, animal husbandry, and fishery industries.

Ministry of Finance, Ministry of Agriculture And Ministry of Maritime Affairs and Fishery

August 2011

6 Revise Ministry of Finance Regulation No. 107 Year 2001 regarding the Import Duty exemption for Defense Equipment, which originally had to be supported by a data contract (RIB) but now it is proposed by simply giving a production plan approved by Ministry of Defense.


7 Revise Ministry of Finance Regulation No. 241 Year 2010 regarding the Imposition of Import Duty for Raw Materials as well as Capital Goods for Manufacturing Pharmaceuticals, Cosmetics, Traditional Medicines, and Machinery Equipment Graphics Industry.

Ministry of Finance August 2011

8 Revise Ministry of Finance Regulation No. 140 Year 2007 regarding Temporary Import. It is proposed that the Import Duty exemption be applied to imported vehicles or specific goods that are used by foreign tourists during their stay and imported equipment that is used only for specific activities in relation to the MICE (meeting, incentive, convention, exhibition).


9 Issue regulations regarding the utilization of abandoned land. National Land Agency, Ministry of Home Affairs, and Local Governments

July 2011


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Regulations and Permits in Regional Level

Below are several identified problems that need further actions in order to improve regulations andpermits at the regional level:1. Finalization of Provincial Spatial Planning (RTRW Propinsi) which will be used as a basis to overcome

potential land use conflict in utilization as forest, plantation, and mining area. BKPRN and Regional Governments should conclude the RTRWs by December 2011.

2. There are still challenges in the security sector which to an extent also concerns tourist destinations. To create a better and safer place for all, local governments need to improve safety and security capabilities through the implementation of strict rules and sanctions for crimes (Law Enforcement).

In addition, there are several other local regulations which have hampered investment activities (e.g.Regional Regulations on Retribution application in several local governments). These regulations need tobe reviewed and aligned to ensure that MP3EI is well implemented.


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Doc. Wijaya Karya

C. Monitoring and Evaluation

In order to ensure the implementation of various strategies of acceleration and expansion formulated under MP3EI, a special and dedicated committee will be formed. This committee will be chaired by the President of the Republic of Indonesia in order to enhance efficiency in coordinating, monitoring, evaluating, and taking strategic decisions to deal with various problems that arise during the implementation stage. This committee should comprise of competent stakeholders including KEN, KIN and business. Daily implementation will be coordinated by Coordinating Minister for Economic Affairs. At the regional level, the Governor will play a key role in the implementation of regional development programs in each economic corridor. It is expected that Governors are able to establish and enhance the existing governor`s forums to create unity and harmony in inter or intra-economic corridors. This committee has been established under the Presidential Regulation No. 32 Year 2011 regarding the MP3EI.

The committee will be supported by Working Team and a dedicated and professional Secretariat with the following explanations:

1. The Working Team shall consist of High ranking officials (echelon 1), and key officials from relevant agencies who will be involved in the implementation of MP3EI action plans. The Working Team is responsible for coordinating the implementation of investment projects and infrastructure projects. This team, will be in collaboration with relevant agencies, and is also responsible for solving inter-ministerial problems, and ensuring government support for the implementation of MP3EI.

2. The Secretariat is a dedicated and full time supporting team that is responsible for developing a monitoring and coordinating system for progress of MP3EI’s implementation. The secretariat will actively support the Implementation Team and Working Team by providing them with a clear analysis and technical proposal to overcome the problems arising from daily monitoring.


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MP3EI - Bab 4

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