Time for Adaptive PNBP: Protecting Businesses, Preserving the Economy

Indonesia’s economy is at a crossroads. On one hand, we are witnessing a digital and industrial transformation. On the other, we are facing a serious contraction in consumer purchasing power, diminished production capacity, and increasing operational burdens for businesses. In this climate, the government must show adaptive leadership—particularly in the way it collects Penerimaan Negara Bukan Pajak (PNBP), or non-tax state revenue.

At present, many businesses are struggling to stay afloat. The latest data from BPS (Badan Pusat Statistik) shows that household consumption, which makes up over 50% of GDP, grew only 4.47% in 2024, a slowdown from the previous year. Meanwhile, micro, small, and medium enterprises (MSMEs)—which make up 99% of Indonesian businesses and employ over 97% of the workforce—are facing reduced margins and liquidity constraints.

Yet despite these challenges, many government institutions continue to impose PNBP based on gross revenue, not net profit. This is fundamentally unfair. A company with high operating costs may generate significant revenue but still make little or no profit. Requiring PNBP from such businesses, especially when they are barely surviving, risks deepening economic stagnation.

A Case for Reform

It is time to implement an adaptive PNBP framework, one that adjusts to the economic realities businesses face today. Here are three key reforms we urgently need:

1. Shift PNBP Basis from Gross Revenue to Net Income

Charging PNBP based on net income reflects a more just and accurate measure of a business’s ability to pay. This will especially help MSMEs, whose average net margins often fall below 10%, compared to large enterprises with significantly more capital flexibility.

2. Streamline and Integrate PNBP Structures

Today’s PNBP ecosystem is fragmented. A business may be charged separately by different ministries for similar activities—by the Ministry of Marine Affairs and Fisheries for catch quotas, and by the Ministry of Environment and Forestry for resource access, to name a few. This overlapping regulatory burden discourages formalization, suppresses investment, and creates inefficiency.

A one-stop digital PNBP platform, integrated across ministries, would not only reduce administrative friction but also promote compliance through transparency and predictability.

3. Sector-Based Relief and Incentives

Certain industries—such as tourism, creative economy, agriculture, and fisheries—are still in recovery mode post-pandemic. The government should offer temporary exemptions, reduced rates, or phased payments for sectors facing disproportionate challenges. Data from Bank Indonesia shows that the hospitality sector, for example, has yet to return to its 2019 levels, and agriculture GDP contribution has been stagnant at around 13% for the past five years despite its role in national food security.

The Bigger Picture

This is not a call to weaken the state’s revenue base. On the contrary, an adaptive PNBP framework would increase long-term compliance, prevent business closures, and support the survival of Indonesia’s job creators. It’s a strategic move—protecting the nation’s productive capacity today ensures a stronger tax and PNBP base tomorrow.

Other countries have already taken similar paths. In the EU, for instance, small businesses were granted tax deferments and fee waivers tied to net income performance during post-pandemic recovery phases. Indonesia can design its own adaptive model rooted in justice and national interest.

Moving Forward

As Vice Chairman for Technology and Digital Transformation at KADIN, I believe this is the right moment to collaborate with ministries, local governments, and stakeholders to restructure PNBP through a digital, sector-sensitive, and performance-based approach.

If we want to see Indonesia’s economy recover faster, create more jobs, and compete globally, we must start by unburdening our entrepreneurs and safeguarding our productive base. In times of hardship, the role of the state is not only to collect—but to protect.