Public–private partnership has become one of the development financing instruments Indonesia relies on most heavily, at a time when infrastructure needs far exceed the state’s fiscal capacity. The concept goes by three names that are often used interchangeably, namely KPS, PPP, and KPBU, and it is formally governed by Presidential Regulation No. 38 of 2015. This article explains the definition, objectives, scheme structures such as BOT and BOO, priority sectors, and its relevance to the food sector. The context is concrete: the national food security budget reached IDR 139.4 trillion in 2025 (Ministry of Finance / Directorate General of Treasury), yet public investment alone is not sufficient without the participation of the private sector.

For readers exploring this topic, the most common source of confusion is terminology. “KPS” (Kerjasama Pemerintah-Swasta, or government–private cooperation) is the older term. “PPP” (public–private partnership) is its international equivalent. “KPBU” (Kerjasama Pemerintah dengan Badan Usaha, or cooperation between government and business entities) is the current standard Indonesian term, adopted when Presidential Regulation 38/2015 superseded earlier regulations. All three refer to the same concept.

What Is a Public–Private Partnership (KPBU)?

A public–private partnership (KPBU) is cooperation between government and business entities in the provision of infrastructure for public benefit, with risk shared among the parties. In Indonesia, the scheme is known by three equivalent terms (KPS, PPP, and KPBU) and is governed by Presidential Regulation No. 38 of 2015, covering sectors ranging from transportation and energy to drinking water, healthcare, and education.

The official definition cited by the Directorate General of State Assets (DJKN) at the Ministry of Finance emphasizes three key elements: the cooperation is intended to serve the public interest; it follows specifications set by the project’s responsible authority (a minister, regional head, state-owned enterprise, or regionally owned enterprise); and it draws in whole or in part on the resources of the business entity, with due regard to risk allocation. The underlying idea is straightforward: the state needs infrastructure, the private sector has capital and operational expertise, and the two share risk in a structured way.

The shift in terminology from “KPS” to “KPBU” is more than cosmetic. It aligns Indonesian practice with global public–private partnership norms, which place risk allocation, government guarantees, and project viability at the foundation. The correspondence between the three terms is set out below.

Sources: DJKN, Ministry of Finance (2026); Presidential Regulation No. 38 of 2015.

Objectives and Benefits of Public–Private Partnership

Why should the government bring in the private sector rather than building infrastructure itself through the state budget? The answer lies in budgetary constraints and the need for efficiency. Indonesia faces a substantial infrastructure financing gap while fiscal space remains limited. This is where public–private partnership offers a way forward.

The principal benefits of the public–private partnership scheme include the following:

• Easing the fiscal burden on the state. Initial investment capital is borne in whole or in part by the business entity, freeing the state budget for other priorities.
• Transfer of expertise and technology. The private sector brings technical capability, project management skills, and innovation that accelerate delivery.
• Measured risk allocation. Construction, operational, and demand risks are assigned to the party best placed to manage them.
• Higher quality public services. Long-term contracts bind providers to agreed performance standards.
• Faster development. Strategic projects can proceed without waiting for the annual budget cycle.

For the private sector, the appeal lies in long-term revenue certainty, whether through user tariffs, availability payments, or Viability Gap Funding provided by the government. The scheme is designed, in other words, so that both parties have a shared interest in keeping the project running.

Partnership Forms and Schemes

Public–private partnership does not take a single form. The choice of scheme depends on who owns the asset during the concession period and whether that asset is transferred back to the government. The three most common forms in Indonesia are BOT, BOO, and BLT.

1. BOT (Build–Operate–Transfer): the business entity builds the facility, operates it during the concession period to recover its investment, and then transfers the asset to the government at no additional cost once the concession ends. This is the most common scheme for long-term infrastructure.
2. BOO (Build–Own–Operate): the business entity builds, owns, and operates the project permanently, with no obligation to transfer the asset. This suits projects whose business model is viable on a standalone basis.
3. BLT (Build–Lease–Transfer): the business entity builds the facility and leases it to the government for a specified period; ownership transfers once the lease term ends.

Alongside these three, variants such as BOOT (Build–Own–Operate–Transfer), BTO (Build–Transfer–Operate), and RUOT (Rehabilitate–Upgrade–Operate–Transfer) are also recognized. The principal difference lies in the point at which ownership transfers, as summarized below.

Source: DJKN, Ministry of Finance (accessed June 2026).

Priority Partnership Sectors in Indonesia

Presidential Regulation 38/2015 specifically governs public–private partnership for infrastructure provision. The sectors covered include:

• Transportation: toll roads, ports, airports, terminals, and railways.
• Energy and electricity: power generation, transmission, and renewable energy.
• Water resources: irrigation and drinking water supply systems (SPAM).
• Telecommunications and informatics: including digital connectivity projects such as Palapa Ring.
• Social infrastructure: hospitals, educational facilities, housing, and waste management.

One point warrants clarification here. The food and primary agribusiness sectors are not explicitly listed as public–private partnership sectors under Presidential Regulation 38/2015. What falls within the scope of the scheme is supporting infrastructure for food, such as irrigation, farm roads, or storage facilities, which may be proposed and approved by the National Development Planning Agency (Bappenas) if it meets the relevant criteria. To encourage private investment directly in the food chain, the government instead uses separate policy instruments, such as the issuance of green bonds and food estate projects designated as National Strategic Projects (PSN), rather than the public–private partnership scheme itself.

By way of illustration of successful public–private partnership projects outside the food sector: SPAM Umbulan in East Java delivers drinking water supply across five districts and municipalities with an investment value of approximately IDR 4.5 trillion, while the Palapa Ring project became the first telecommunications project to use an availability payment scheme, with an investment value of around IDR 7.6 trillion, and has been fully operational since October 2019 (Ministry of Finance KPBU Portal).

The Difference Between KPBU and Nucleus–Plasma Partnership

Because the food sector does not fall directly within the public–private partnership scheme, Indonesian agribusiness has pursued a different partnership model: the nucleus–plasma arrangement, governed by Minister of Agriculture Regulation No. 13 of 2017 on Livestock Business Partnerships. Both are referred to as “partnerships,” but their participants, subject matter, and legal foundations differ. Distinguishing between them is important if discussion of the private sector’s role in the food sector is to remain accurate.

Sources: DJKN, Ministry of Finance; Minister of Agriculture Regulation 13/2017 via the Ministry of Agriculture.

Under the nucleus–plasma model, the nucleus company provides livestock production inputs, technical guidance, and a marketing guarantee, while the plasma farmer carries out production and sells the output back to the nucleus at the contract price. This model forms the backbone of agribusiness partnership in practice and provides important context for any discussion of how companies work with smallholder farmers. For readers who wish to explore the system further, the food partner ecosystem sets out how livestock partnerships operate in greater detail.

Why Private Partnership Matters for National Food Security

The urgency of the private sector’s role in the food sector is most clearly reflected in a single figure: Indonesia’s stunting prevalence remained at 19.8 percent in 2024 (SSGI 2024, Ministry of Health). This means that nearly one in five Indonesian children under five suffers from chronic undernutrition. The figure has improved, falling from 21.5 percent in 2023 and coming in below Bappenas projections. Yet the distance to the national target of 14.2 percent by 2029 remains wide and calls for accelerated nutritional intervention, particularly in animal protein intake.

The sustained decline in stunting illustrates both progress made and work still outstanding.

Source: Ministry of Health / BKPK (2025).

On the financing side, the government allocated IDR 139.4 trillion to food security in 2025, covering mechanization, agricultural digitalization, superior seed, irrigation, farm roads, and storage facilities (Ministry of Finance / Directorate General of Treasury). The figure is substantial, but it does not stand alone. Official Directorate General of Treasury documents explicitly note that the government is adopting innovative financing approaches, including the issuance of green bonds and collaboration with the private sector through public–private partnership schemes. Private collaboration is therefore positioned as a complement to public investment, not a substitute for it.

Case Examples of Partnership in the Agribusiness Sector

Because formal public–private partnership arrangements have yet to extend far into the food chain, corporate–government collaboration in agribusiness has developed in other forms. The nucleus–plasma model guarantees the absorption of harvests through off-take contracts; food estate programs designated as National Strategic Projects involve business entities in developing large-scale food zones; and at the grassroots level, agri-food companies are building cooperative ecosystems that bring together corporations, regional governments, and farming communities. These models are not public–private partnerships in the sense of Presidential Regulation 38/2015 but agribusiness partnerships that complement the state’s role. It is in this space that the private sector’s contribution to food security is felt most keenly, through local economic empowerment, knowledge transfer, and market certainty for small producers.

Case Study: Corporate, Government, and Community Collaboration — Complementary Rather Than KPBU

One point should be made clear at the outset: this section does not present an example of a public–private infrastructure partnership project. PT Japfa Comfeed Indonesia Tbk, one of Indonesia’s largest integrated agri-food companies, does not undertake government KPBU or PPP projects. What is relevant in Japfa’s experience is its model of corporate–government–community collaboration: an agribusiness partnership ecosystem that complements, rather than replaces, formal government partnership schemes. This position is consistent with the way the company frames Japfa’s collaboration in national food security, namely as a complementary contribution to the national agenda rather than an assumption of the state’s role. This is the lens through which it should be read.

An Ecosystem of Regional Government, Corporations, and Village Communities

One expression of this cross-party collaboration has emerged at the village level. On 14 January 2026, Japfa Comfeed held an outreach session on developing food security businesses in the livestock sector together with the Village Government and BUMDes of Harjowinangun, Godong District, Grobogan Regency, Central Java. The material covered business opportunities in livestock farming, livestock management, feed handling, and the sustainability of village-based enterprises, attended by village officials, the Village Consultative Body, and university community service students.

This initiative, to be clear, remains at the planning and exploratory stage. No formal agreement or memorandum of understanding has been signed, as official village sources have confirmed. Its value lies not in realized impact figures but in the model it offers: village government, village-owned enterprises, corporations, and universities sitting at the same table to design a local livestock business. It is this kind of model that makes multi-stakeholder collaboration relevant to food security from the ground up.

Industry–Academic Research Partnerships

Another form of collaboration takes place in the research sphere. Japfa’s partnership with the Faculty of Animal Science at Universitas Gadjah Mada (UGM) has been in place since 2003, an industry–academic relationship rather than a government assignment or public–private partnership scheme. On 29 April 2026, Japfa handed over a free-range layer facility to UGM with an initial phase of 1,500 laying hens, serving as a living laboratory for research into sustainable livestock management based on the Five Freedoms principles (Trobos Livestock; Asian Agribiz, May 2026).

The milestones of this partnership span many years: a Closed House Teaching Farm (2017), post-harvest and closed-house laboratories for feed research (2019), and the free-range layer facility (2026). For the livestock sector, industry–research collaboration of this kind accelerates the transfer of knowledge from the laboratory to the field.

The Socio-Economic Impact of the Partnership Ecosystem

The backbone of all this collaboration is the network of partner farmers. Through cooperation with more than 8,700 partner farmers across Indonesia, as documented in the Japfa Sustainability Report 2025, the company demonstrates that collaboration among corporations, regional governments, and smallholder farmers can sustain an inclusive protein ecosystem. Technical support from field extension officers (PPL), recommendation letters to banks for access to capital, and the conversion to closed-house systems that reached almost 100 percent in Java by the end of 2025 are concrete instruments of empowerment.

Guided by the vision “Growing Towards Mutual Prosperity,” this model underlines a single point: agribusiness partnerships involving multiple parties can create a stable and sustainable business ecosystem, even without a formal public–private partnership framework. The state builds infrastructure and policy; the private sector closes gaps in the production chain, technology, and community empowerment. Ultimately, both are working toward the same objective.

Frequently Asked Questions

What are examples of public–private partnership projects in the food sector?

The food sector has relatively few formal public–private partnership projects, because Presidential Regulation 38/2015 focuses on infrastructure. Corporate–government collaboration in food has developed in other forms: food estate programs designated as National Strategic Projects that involve the private sector; nucleus–plasma partnerships under Minister of Agriculture Regulation 13/2017 that guarantee the absorption of harvests; and collaborative ecosystems linking corporations, village governments, and communities, such as the exploratory work on BUMDes-based livestock development supported by regional government.

What are the key regulations governing public–private partnership in the food sector, particularly poultry?

For general infrastructure, Presidential Regulation No. 38/2015 is the principal public–private partnership regulation. For livestock agribusiness, Minister of Agriculture Regulation No. 13/2017 governs business partnerships under the nucleus–plasma model. Fiscal commitment is reflected in the 2025 food security budget of IDR 139.4 trillion, while green bonds and public–private partnership schemes serve as instruments for attracting private investment into the food chain (Ministry of Finance / Directorate General of Treasury).

Why is private partnership important for Indonesia’s food security?

Two data points stand out. First, stunting remains at 19.8 percent (SSGI 2024, Ministry of Health), meaning that nearly one in five Indonesian children under five suffers from chronic undernutrition, even though this is down from 21.5 percent in 2023. The target of 14.2 percent by 2029 requires accelerated animal protein intake. Second, while the government budget of IDR 139.4 trillion in 2025 is substantial, achieving these targets will require private investment in supply chains, technology, and the empowerment of smallholder farmers.

Public–private partnership, in its various forms, is increasingly decisive for Indonesia’s development, in physical infrastructure as much as in the food chain. The KPBU scheme established under Presidential Regulation 38/2015 has proven itself in projects such as SPAM Umbulan and Palapa Ring. In the food sector, where a formal framework is not yet fully in place, corporate–government–community collaboration is taking on a complementary role. The experience of PT Japfa Comfeed Indonesia, from a network of more than 8,700 partner farmers to its research collaboration with UGM, illustrates how the private sector can strengthen the food ecosystem on the principle of Mutual Prosperity, complementing the government’s role in delivering inclusive and sustainable food