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Securing Incentives
in Indonesia’s Special Economic Zones

Private Infrastructure Special Economic Zones

Indonesia is aligning its industrial growth with sustainability by coupling green construction priorities with Special Economic Zones (Kawasan Ekonomi Khusus/KEK)-based fiscal and customs facilities. Within KEK, developers and operators can combine customs/VAT relief on capital goods and materials with national tax incentives for training, R&D, and priority-sector investment.

For investors, this means sustainability initiatives can unlock real cash-flow advantages during build-out and operations, while KEK’s single-window administration and integrated systems reduce procedural friction.

Putranto Alliance helps developers design KEK-ready projects—structuring legal entities, documentation, and compliance so that sustainability benefits translate into bankable savings and audit-proof reporting.

KEK as The Area-Based Incentive Layer

KEK is a zoned (area-based) regime inside Indonesia’s customs territory that concentrates fiscal (tax) and customs facilities, plus licensing conveniences to accelerate investment and jobs. This area is regulated through Government Regulation (Peraturan Pemerintah/PP) Number 40 Year 2021 concerning Implementation of Special Economic Zones.

Key characteristics relevant to construction projects:

  • Customs relief:
    • Build phase: Import capital goods can receive import duty exemption (Pajak Dalam Rangka Impor/PDRI), such as VAT/PPnBM, not collected for a fixed period.
    • Production phase: Duty suspension and PDRI not collected for machines, raw/auxiliary materials used in production.
  • Broader policy stack: KEK often pairs with Tax Holiday/Tax Allowance, immigration and manpower conveniences, and OSS RBA integration.
  • Digital workflow: Movement and inventory control via Sistem Aplikasi KEK and CEISA 4.0 with PPKEK (single customs document), IT Inventory, and free movement of goods among KEK tenants.

How KEK differs from other systems:

Important Points of KEK

  • Bonded Zone (Kawasan Berikat): entity-based; narrower sectoral scope; primarily duty/VAT suspension.
  • Free Trade Zone (Kawasan Bebas): outside the customs territory; broader consumption relief; not the same governance as KEK.
  • KEK: area-based, multi-sector (incl. tourism, education, health, finance), plus layered tax incentives and streamlined procedures—ideal for complex, multi-tenant industrial or sustainable precincts.

The Sustainability Stack: Incentives in KEK

The key regulations include:

  1. Deduction for Human Capital in Green Construction
    1. Vocational Training (up to ~200% deduction): Extra corporate tax deduction for qualifying training/ apprenticeships tied to energy-efficient building methods, green materials handling, HSE, and ESG reporting skills.
    2. What to prepare: MoUs or contracts with accredited institutions, training curricula, attendance/assessment logs, cost breakdowns, and payroll links.
  2. Deduction for R&D (up to ~300% deduction)
    1. Qualifying R&D on low-carbon cement, recycled aggregates, modular/low-waste methods, energy-saving MEP designs, building performance monitoring, or circular construction logistics.
    2. What to prepare: Project charters, research protocols, prototype/test records, certification/test results, bills of materials, time sheets, and cost centers clearly mapped to the R&D workstream.
  3. Tax Holiday / Tax Allowance for Priority Investments
    1. Tax Holiday: Full or substantial CIT relief for qualifying large-scale, pioneer, or renewable/sustainable infrastructure within KEK (tenor varies by investment size/sector).
    2. Tax Allowance: For mid-scale investments—additional deduction (capex-based), accelerated depreciation/amortization, and reduced withholding in certain cases.
    3. What to prepare: Masterplan, KBLI alignment, feasibility, KEK operator endorsement (where applicable), OSS filings, and investment realization reports.
  4. VAT & Import Duty Facilities for Green Infrastructure Inputs
    1. Build phase: Duty exemption + PDRI not collected for capital goods to construct green-certified buildings/plants inside KEK.
    2. Operation phase: Duty suspension + PDRI not collected for machines and inputs supporting ongoing production (subject to IT Inventory and PPKEK control).
    3. What to prepare: Masterlist of goods, HS codes, supplier contracts, technical justifications tying items to sustainable outcomes (e.g., energy intensity reduction).
  •  

Claim Procedure in KEK

  1. Planning & Structuring
    1. Select KEK location/operator; align tenant profile and plot needs (perimeter, utilities, bonded circulation).
    2. Establish PT (local/PT PMA) developer/operator with the correct KBLI; secure NIB via OSS RBA.
    3. Map which incentives apply: super deductions, holiday/allowance, VAT/import duty facilities.
  2. Compliance Architecture
    1. Implement IT Inventory integrated with Sistem Aplikasi KEK/CEISA 4.0; designate compliance officers.
    2. Create cost centers for training vs. R&D vs. capex; codify chart of accounts so expenses cleanly map to incentive buckets.
    3. Standardize document trails (contracts, attendance logs, lab tests, commissioning reports, SLF records).
  3. Application & Approvals 
    1. Deduction: Register programs/projects (training/R&D) with required ministries/regulators; secure supporting letters/certifications.
    2. Tax holiday/allowance: Submit investment dossier and projections via OSS; coordinate with KEK Administrator and ministries. 
    3. Customs/VAT facilities: File Masterlist; use PPKEK for goods in/out; maintain free movement records within KEK.
  4. Reporting & Audit Readiness
    1. Monthly/quarterly reconciliation of PPKEK vs. IT Inventory vs. GL.
    2. Prepare support files for DJBC/DGT monitoring and KEK Administrator monev (CCTV coverage zones, inventory snapshots, throughput).
    3. Year-end: tie financial statements to incentive schedules; prepare roll-forward tables for each facility.

Governance: Controls That Keep Incentives Safe

  • Segregation of goods flows: Clear demarcation between KEK and non-KEK activities; labels, bin locations, BOM traceability.
  • Evidence of sustainability linkage: Training syllabi, R&D objectives, commissioning reports for green systems (e.g., solar, heat recovery, BMS).
  • Single-document discipline: PPKEK completeness; alignment with purchase orders, GRNs, and usage/production logs.
  • Change management: When scope changes (line upgrades, new materials), update Masterlist and incentive registrations promptly.

Making Sustainable and Bankable Venture in KEK

Putranto Alliance coordinates legal, tax, and customs workstreams so incentives are real, defensible, and lender-grade:

  1. Eligibility mapping & scenario design: Assisting with deduction vs holiday/allowance vs VAT/customs relief by CAPEX/ OPEX profile.
  2. Entity & documentation setup: PT/PT PMA deeds, OSS licensing, KEK tenancy, Masterlist preparation, and PPKEK/IT Inventory playbooks.
  3. Accounting & reporting architecture: COA design, cost-center mapping, evidence registers, and monthly reconciliations for audit trails.
  4. Filing & liaison: With KEK Administrators, DJBC, DGT, and technical ministries for certifications and post-audit defense.

Building Faster Green Value

KEK turns sustainable construction from a cost center into a competitive advantage. They provide lower landed costs, faster commissioning, and stronger investor narratives.

When sustainability roadmaps are embedded in KEK-ready entities, customs, and accounting structures from day one, incentives compound and compliance stays clean.

Putranto Alliance helps developers and operators convert green commitments into measurable fiscal outcomes, from first pile to steady state.

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