Fiscal Incentives for Private Investment in Indonesia’s Recycling: Lessons from Japan’s Eco-Town

Stefano Richard Desmond; Radityo Utomo; Sonny Vavirya Wiranata

doi:10.69693/ijmst.v4i3.13831

Authors

Stefano Richard Desmond Direktorat Jenderal Pajak - Kementerian Keuangan
Radityo Utomo Direktorat Jenderal Pajak - Kementerian Keuangan
Sonny Vavirya Wiranata Direktorat Jenderal Pajak - Kementerian Keuangan

DOI:

https://doi.org/10.69693/ijmst.v4i3.13831

Keywords:

Fiscal Incentives, Private Investment, Waste Management, Waste-to-Energy, Recycling Industry, Eco-Town Programme

Abstract

Indonesia faces increasing pressure on its waste management system due to population growth, urbanization, rising waste generation, and limited landfill capacity. Waste-to-energy and recycling infrastructure can reduce landfill dependence and support the transition toward a circular economy. However, such projects require substantial upfront investment and face risks related to financing, revenue certainty, regulatory changes, and limited local fiscal capacity, reducing their attractiveness to private investors. This study aims to examine how fiscal incentives can reduce investment barriers and improve the financial viability of waste management projects in Indonesia by drawing lessons from Japan’s Eco-Town Programme. A qualitative comparative case study approach is employed, comparing the Sunter Intermediate Treatment Facility (ITF) in Jakarta with Japan’s Eco-Town Programme. The study analyzes secondary data from policy documents, government reports, institutional publications, and academic literature, focusing on fiscal incentives, investment risks, financing mechanisms, regulatory certainty, and government–private sector cooperation. The findings indicate that the initial tipping fee mechanism for ITF Sunter provided revenue support but created potential long-term fiscal pressure and was insufficient to address broader investment risks. The subsequent feed-in tariff mechanism under Presidential Regulation No. 109 of 2025 seeks to improve revenue certainty and reduce dependence on local government financing. Lessons from Japan demonstrate that effective investment de-risking requires an integrated ecosystem combining fiscal support, regulatory stability, co-financing, recycling industry development, and risk-sharing. The study recommends an integrated fiscal incentive framework linking waste-to-energy incentives with upstream recycling support and long-term regulatory certainty to strengthen investment viability and fiscal sustainability.

References

1. Alao, M. A., Popoola, O. M., & Ayodele, T. R. (2022). Waste-to-energy nexus: An overview of technologies and implementation for sustainable development. Cleaner Energy Systems, 3, 100034. https://doi.org/10.1016/j.cles.2022.100034

2. Batista, M., Goyannes Gusmão Caiado, R., Gonçalves Quelhas, O. L., Brito Alves Lima, G., Leal Filho, W., & Rocha Yparraguirre, I. T. (2021). A framework for sustainable and integrated municipal solid waste management: Barriers and critical factors to developing countries. Journal of Cleaner Production, 312, 127516. https://doi.org/10.1016/j.jclepro.2021.127516

3. BPK RI. (2023). Permasalahan pengelolaan sampah dan pembangunan ITF Sunter Jakarta. https://jakarta.bpk.go.id/wp-content/uploads/2023/10/Tribun.pdf

4. Herrador, M., de Jong, W., Nasu, K., & Granrath, L. (2023). The rising phenomenon of circular cities in Japan. Case studies of Kamikatsu, Osaki and Kitakyushu. Science of the Total Environment, 894, 165052. DOI: 10.1016/j.scitotenv.2023.165052

5. Hidayah, A., Sopiyan, A. R., & Mayasari, R. (2025). Pengaruh Kinerja Keuangan Terhadap Dana Insentif Fiskal pada Pemerintah Daerah Provinsi di Indonesia. Economic Reviews Journal, 4(2), 843-859. https://doi.org/10.56709/mrj.v4i2.530

6. Ikhlasi, H. H., & Firdaus, M. S. (2025). Identifikasi Permasalahan Pengelolaan Sampah di Daerah Istimewa Yogyakarta: Perspektif Kerjasama Antar Daerah dan Peran Kelembagaan. Jurnal Terapan Pemerintahan Minangkabau, 5(1), 32-40. DOI: 10.33701/jtpm.v5i1.5117

7. Kasuma, M. N. A. H., Fadhila, A., & Aini, N. (2024). Kepastian hukum kebijakan extended producer responsibility bagi produsen penghasil sampah. Anthology: Inside Intellectual Property Rights.

8. Kementerian Lingkungan Hidup dan Badan Pengendalian Lingkungan Hidup. (2025). Sistem Informasi Pengelolaan Sampah Nasional (SIPSN). https://www.kemenlh.go.id/

9. Keong, C. Y., Onuma, A., He, Y., & Ern, L. K. (2025). Ecological Economics in Practice: Kawasaki's Low-Entropy Urban Transition Through Industrial Symbiosis and Thermodynamic Governance. Journal of Sustainability, 1(2). DOI: 10.55845/jos-2025-1262

10. Khan, I., Chowdhury, S., & Techato, K. (2022). Waste to Energy in Developing Countries—A Rapid Review: Opportunities, Challenges, and Policies in Selected Countries of Sub-Saharan Africa and South Asia towards Sustainability. Sustainability, 14(7), 3740. https://doi.org/10.3390/su14073740

11. Kitagawa, F. (2024). Lessons from the Japanese ‘regional revitalisation’–impacts of regional industrial policies through decentralisation. Contemporary Social Science, 19(4), 602-621. DOI: 10.1080/21582041.2024.2433018

12. Kurnia, K., Fawwaz, I. R., & Herlina, L. (2023). Penerapan polluter pays principle dalam perkara tumpahan minyak di Teluk Kota Balikpapan. Jurnal Hukum Ius Quia Iustum, 30(3), 561-582. DOI: 10.20885/iustum.vol30.iss3.art5

13. Marlina, S. (2025). Analisis kebijakan pengelolaan sampah perkotaan dan partisipasi masyarakat. Jurnal Ilmu Administrasi dan Kebijakan Publik, 1(1), 1-8. http://jurnal.pustakabangsaindonesia.com/index.php/jiakp/article/view/26

14. Nguyen, T. D. T., Kawai, K., & Nakakubo, T. (2021). Drivers and constraints of waste-to-energy incineration for sustainable municipal solid waste management in developing countries. Journal of Material Cycles and Waste Management, 23, 1688–1697. https://doi.org/10.1007/s10163-021-01227-2

15. Ohta, H., & Barrett, B. F. (2023). Politics of climate change and energy policy in Japan: Is green transformation likely?. Earth System Governance, 17, 100187. DOI: 10.1016/j.esg.2023.100187

16. Pambudi, P. A. (2025). Menuju Transformasi Pengelolaan Sampah di Yogyakarta: Solusi Berkelanjutan Melalui Kolaborasi Multi-Stakeholder. Pangripta Sembada: Jurnal Perencanaan Pembangunan, 2(1), 17-32. DOI: 10.64174/jps.v2i1.33

17. Putri, A. A., Rahma, A. K., Anwar, F. A., & Nadhira, N. S. (2025). KERJA SAMA SURABAYA DAN KITAKYUSHU DALAM PENGEMBANGAN SUPER DEPO SUTOREJO SEBAGAI PUSAT DAUR ULANG SAMPAH. Jurnal Media Akademik (JMA), 3(6). DOI: 10.62281/v3i6.2067

18. Ramdani, S. A. (2024). Pertumbuhan Ekonomi dan Dampaknya pada Lingkungan: Studi Kasus Pengelolaan Sampah di Provinsi Jawa Barat. Jurnal Inovasi Daerah, 3(2), 139-151. DOI: 10.56655/jid.v3i2.286

19. Rezania, S., Oryani, B., Nasrollahi, V. R., Darajeh, N., Lotfi Ghahroud, M., & Mehranzamir, K. (2023). Review on Waste-to-Energy Approaches toward a Circular Economy in Developed and Developing Countries. Processes, 11(9), 2566. https://doi.org/10.3390/pr11092566

20. Ridwan, M., Rifandy, R. D., Febriyanti, I. O., Agripina, N. T., & Hisyam, L. A. (2026). Pengaruh Faktor Politik Terhadap Implementasi Peraturan Daerah Pengelolaan Sampah di Kota Cirebon. PESHUM: Jurnal Pendidikan, Sosial dan Humaniora, 5(2), 2806-2815. DOI: 10.56799/peshum.v5i2.14576

21. Samhati, S., Hidayat, A., & Makhroja, M. N. (2023). Kerjasama Bilateral Indonesia dan Denmark dalam Pembangunan Pembangkit Listrik Tenaga Bayu (Studi Kasus: Pembangunan Pembangkit Listrik Tenaga Bayu untuk Keberlanjutan Energi di Sulawesi Selatan). Indonesian Journal of Global Discourse, 5(1), 90-109. DOI: 10.29303/ijgd.v5i1.83

22. Simamora, S. L. S. I., & Imsar, I. (2025). Analisis Efektivitas Insentif Ekonomi terhadap Upaya Pelestarian SDA dan Mitigasi Kerusakan Lingkungan. Journal of Islamic Economics and Finance, 3(3), 257-265. DOI: 10.59841/jureksi.v3i3.3230

23. Simanjuntak, R. H., Manihuruk, R., Viendyasari, M., & Syukri, M. (2026). Kerangka Sinergi Kebijakan, Teknologi WtE, dan Prinsip ESG untuk Percepatan Bioenergi Sampah Perkotaan di Indonesia. Journal of Empowerment Community, 8(1), 96-112. DOI: 10.36423/jec.v8i1.2684

24. Sodiq, A., Utami, J. M. P., & Erhan, W. S. (2025). Peran Pemerintah Dan Kebijakan Publik Dalam Menghadapi Eksternalitas Perekonomian. AKPEM: Jurnal Akuntansi Keuangan dan Pemerintahan, 7(2), 23-38. DOI: 10.30606/akpem.v7i2.4102

25. Stockbit Snips. (2025). Pemerintah rilis aturan baru waste-to-energy. https://snips.stockbit.com/snips-terbaru/-pemerintah-rilis-aturan-baru-wastetoenergy

26. Sudarya, I. (2026). Optimalisasi Foreign Direct Investment sebagai Alternatif Pembiayaan dalam Mendukung Percepatan Transisi Energi di Indonesia. Beleid, 4(2). DOI: 10.51825/beleid.v4i2.41985

27. Tamba, W. P., & Sujastika, I. (2024). Kebijakan Pengelolaan Sampah Jakarta di TPST Bantargebang: Studi Literatur Dampak Lingkungan dan Sosial dalam Perspektif Pembangunan Berkelanjutan. Salus Cultura Jurnal Pembangunan Manusia dan Kebudayaan, 4(2), 248-262. DOI: 10.55480/saluscultura.v4i2.275

28. United Nations Centre for Regional Development. (2020). Role of eco-towns in advancing 3R and circular economy: International cases and experiences. https://sdgs.un.org/sites/default/files/2020-12/UNCRD_10th%203R%20Forum_Webinar%20I-Background%20paper-FINAL.pdf

29. Van Berkel, R., Fujita, T., Hashimoto, S., & Geng, Y. (2009). Industrial and urban symbiosis in Japan: Analysis of the Eco-Town program 1997–2006. Journal of Environmental Management, 90(3), 1544–1556. DOI: 10.1016/j.jenvman.2008.11.010

30. Wibisono, M. P. (2021). Green Sukuk Sebagai Instrumen Untuk Mencapai Sustainable Development Goals Melalui Pengelolaan Sampah (PLTSa). Jurnal Ilmiah Mahasiswa FEB, 10(1). https://jimfeb.ub.ac.id/index.php/jimfeb/article/view/7787

31. Widhiari, L. K. P., & Rinaldi, E. (2026). Eksternalitas Sampah Lintas Wilayah dan Kegagalan Implementasi Ekonomi Biru: Studi Dampaknya terhadap Keberlanjutan Pariwisata Pesisir Pulau Pari. Jurnal Inovasi Ekonomi dan Keuangan, 3(3), 460-465. DOI: 10.58982/jike.v3i3.1140

32. Wirjawan, J. K., & Choandi, M. (2024). Implementasi arsitektur berkelanjutan dengan pengelolaan sampah melalui sistem teknologi waste to energy (wte). Jurnal Sains, Teknologi, Urban, Perancangan, Arsitektur (Stupa), 6(1), 295-310.. DOI: 10.24912/stupa.v6i1.27474