National Strategic Project

National Strategic Projects (Proyek Strategis Nasional, 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 (KPBU), prioritizing the use of domestic components. The legal basis for PSN is Presidential Regulation No. 3 of 2016 which was successively amended by Presidential Regulation No. 58 of 2017, Presidential Regulation No. 56 of 2018, and Presidential Regulation No. 109 of 2020.

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. Meanwhile, the operational criteria that must be met is a pre-feasibility study and having an investment value must be above Rp 100 billion, or the project has a strategic role in encouraging regional economic growth. By being included in the list of National Strategic Projects, an infrastructure project gains several advantages in the form of accelerated development, because every obstacle, both regulatory and licensing, must be resolved by the relevant ministers, governors and regents. Apart from that, the PSN project also benefits from accelerated land provision times and guaranteed political security.

Since its launch in 2016 to December 2019, 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 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 (RPJMN), 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 (RPJMN) 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
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.

Legislation

 * Act No. 2 of 2012 concerning Land Acquisition for Development in the Public Interest
 * Government Decree No. 42 of 2021 concerning Facilitation of National Strategic Projects
 * 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 Projects
 * 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.[6]

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.[19]

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.[35]