Indonesia’s National Strategic Projects (PSN) initiative demonstrates the government’s efforts to accelerate infrastructure development, boost connectivity and strengthen national competitiveness. PSN projects qualify for a variety of tax incentives designed to reduce the tax burden on investors and project developers and attract further investment. PSN entered a new phase under the administration that took office in October 2024, with substantial progress made on the direction and focus of the initiative.
Since the introduction of PSN in 2016, 190 PSN have been completed, absorbing more than 11 million workers nationwide with a total investment value exceeding IDR 1,500 trillion as of 31 December 2023. Indonesian President Prabowo officially designated 77 PSN projects to be implemented by first quarter of 2025, consisting of 29 new initiatives and 48 carryover projects from the previous government, mostly in the development of industrial and special economic zones.
In addition to a focus on the development of such zones and infrastructure, the current administration emphasizes projects that directly contribute to self-sufficiency and human development and have included projects that address food security, energy and water independence, residential construction and initiatives to add value to natural resources. This shift represents a continuation of the infrastructure-centric agenda while adding a more people-centered and strategic sustainability component. The PSN program has delivered major progress in national connectivity in spite of some challenges, which have resulted in the following 43 projects being declared unsuccessful:
Despite these setbacks, many PSN projects—particularly in transport, energy and digital infrastructure—played a transformative role in connecting regions and driving investment growth.
Tax incentives remain a cornerstone for promoting private sector participation in PSN implementation and attracting investment. Regulations released in 2024 allow taxpayers qualifying as PSN operators and meeting specific criteria to apply for tax reduction facilities, including the following:
Additionally, businesses that do not qualify as pioneer industries or that have investments below IDR 100 billion may still apply for tax allowances or other forms of tax relief depending on their specific characteristics. To qualify, taxpayers must demonstrate that their investment is high-value or export-oriented, creates significant employment opportunities and utilizes high levels of domestic components in their operations in Indonesia.
The rapid development of PSN in Indonesia, with the focus shifting from building infrastructure to nurturing human capital and sustainable self-sufficiency, should be viewed as an opportunity for investors. For taxpayers, understanding the tax rules and available tax incentives is important to make the best use of the benefits and maintain compliance. As new strategic projects continue, cooperation among the government, private sector and tax professionals are essential to achieve a mutual benefit while supporting national economic growth.
Irwan Kusumanto
Suwenny Leonard
Octa Surya Fatra
BDO in Indonesia
Since the introduction of PSN in 2016, 190 PSN have been completed, absorbing more than 11 million workers nationwide with a total investment value exceeding IDR 1,500 trillion as of 31 December 2023. Indonesian President Prabowo officially designated 77 PSN projects to be implemented by first quarter of 2025, consisting of 29 new initiatives and 48 carryover projects from the previous government, mostly in the development of industrial and special economic zones.
In addition to a focus on the development of such zones and infrastructure, the current administration emphasizes projects that directly contribute to self-sufficiency and human development and have included projects that address food security, energy and water independence, residential construction and initiatives to add value to natural resources. This shift represents a continuation of the infrastructure-centric agenda while adding a more people-centered and strategic sustainability component. The PSN program has delivered major progress in national connectivity in spite of some challenges, which have resulted in the following 43 projects being declared unsuccessful:
| Category | Number of Projects | Remarks |
| Toll Roads | 32 | Funding, land acquisition and feasibility constraints |
| Dams | 5 | Environmental and administrative delays |
| Irrigation | 2 | Technical and budgetary inefficiencies |
| Raw water | 1 | Overlapping permits |
| Drinking water supply system | 1 | Cost overrun and local coordination issues |
| Sanitation | 1 | Incomplete implementation |
| Industrial areas | 1 | Lack of investor interest |
Despite these setbacks, many PSN projects—particularly in transport, energy and digital infrastructure—played a transformative role in connecting regions and driving investment growth.
Tax incentives remain a cornerstone for promoting private sector participation in PSN implementation and attracting investment. Regulations released in 2024 allow taxpayers qualifying as PSN operators and meeting specific criteria to apply for tax reduction facilities, including the following:
| Type of Benefit | Description |
| Income tax rate reduction | Reduction of net taxable income, providing upfront fiscal relief for early-stage investments. |
| Accelerated depreciation and amortization | Accelerated depreciation of tangible assets or amortization of intangible assets, enhancing cash flow efficiency. |
| Extension of tax loss carryforward | Loss carryforward facility, extending the period of loss compensation for up to 10 years, to strengthen investment resilience. |
Additionally, businesses that do not qualify as pioneer industries or that have investments below IDR 100 billion may still apply for tax allowances or other forms of tax relief depending on their specific characteristics. To qualify, taxpayers must demonstrate that their investment is high-value or export-oriented, creates significant employment opportunities and utilizes high levels of domestic components in their operations in Indonesia.
The rapid development of PSN in Indonesia, with the focus shifting from building infrastructure to nurturing human capital and sustainable self-sufficiency, should be viewed as an opportunity for investors. For taxpayers, understanding the tax rules and available tax incentives is important to make the best use of the benefits and maintain compliance. As new strategic projects continue, cooperation among the government, private sector and tax professionals are essential to achieve a mutual benefit while supporting national economic growth.
Irwan Kusumanto
Suwenny Leonard
Octa Surya Fatra
BDO in Indonesia