Parapuar is not a Special Economic Zone (KEK), so the KEK fiscal package under PP 40/2021 — income-tax reductions, PPN/PPnBM facilities, customs and excise exemptions, and KEK-specific licensing easements — does not apply to any of its 19 lots. An investor there falls back on Indonesia’s general national instruments, each with its own eligibility tests, and not one of them has been promised, pre-arranged, or even publicly mentioned for Parapuar.
That is the whole answer in two sentences, and you will not find it stated plainly anywhere else. Government promotional material, wire-service rewrites, and broker pages all talk around the question. Some imply incentives by association, placing Parapuar next to Mandalika or Likupang in the same paragraph. This page does the opposite: it walks through each fiscal instrument Indonesia actually offers, says which ones are categorically off the table at Parapuar, which ones might apply case-by-case, and which questions have no published answer at all.
What “KEK” means, and what Parapuar’s status actually is
A KEK (Kawasan Ekonomi Khusus, or Special Economic Zone) is a legally designated area established by its own Peraturan Pemerintah, administered through the Dewan Nasional KEK, and carrying a defined bundle of fiscal and non-fiscal facilities set out in PP 40/2021. The designation is the trigger. No PP, no KEK, no facilities — regardless of how strategic the location is or how often officials describe it as a priority.
Parapuar has never been designated a KEK. It is an integrated tourism development area on the forested hills above Labuan Bajo, managed by BPOLBF (Badan Pelaksana Otorita Labuan Bajo Flores) under Perpres 32/2018. That Perpres creates a tourism authority body with coordinative and authoritative functions. It is not a KEK instrument and grants no fiscal facilities of its own.
Why the confusion persists
Three things feed the mix-up. First, Labuan Bajo is one of five Destinasi Pariwisata Super Prioritas (DPSP) — a policy priority label that sounds like it should come with money attached but carries no automatic tax treatment for private investors. Second, two of the other DPSP destinations, Mandalika and Likupang, sit inside actual KEKs, so readers assume the pattern holds. Third, the nearby Golo Mori area developed by ITDC has been floated as a candidate tourism KEK, and coverage of that proposal bleeds into coverage of Parapuar. We unpack the Golo Mori question separately in our fact-check on whether Golo Mori or Parapuar counts as a KEK — short version: as of our research date, neither has an establishing PP.
KEK facilities vs what Parapuar offers
Here is the side-by-side that promotional material never prints. The left column lists the main facility categories an established KEK provides under PP 40/2021. The right column states what an investor at Parapuar gets instead.
| Facility category | Inside an established KEK (PP 40/2021) | At Parapuar today |
|---|---|---|
| Corporate income tax | Substantial income-tax reductions for main business activities, scaled to investment value and duration | Nothing zone-specific. Standard national rates apply unless a general instrument (see below) is separately granted |
| PPN / PPnBM (VAT and luxury sales tax) | Non-collection facilities on qualifying deliveries into and within the zone | Does not apply. Normal VAT treatment |
| Customs and excise | Exemptions or deferrals on imports into the zone | Does not apply. Any import-duty relief must be pursued through general OSS/BKPM channels, case-by-case |
| Licensing | KEK administrator with delegated one-stop licensing easements | Standard OSS-RBA licensing nationally; BPOLBF offers coordination and facilitation, not a delegated licensing regime |
| Land and immigration easements | KEK-specific land-titling and foreign-worker/immigration conveniences | Land is BPOLBF’s HPL with derivative rights by negotiation; immigration rules are the ordinary national ones |
Read the right column honestly and the picture is clear. Parapuar’s offer to investors is land legality and institutional facilitation, not fiscal advantage. That can still be a rational trade — “clean and clear” state land above a supply-constrained destination has its own value — but it is a different proposition from a KEK, and pricing a project as if KEK economics applied would be an error.
Instrument-by-instrument reality check
Indonesia does run national incentive schemes that exist independently of any zone. Whether a Parapuar project can access them depends on the project’s KBLI classification, scale, and the regulation text in force at the time — never on the Parapuar address itself.
Tax holiday — PMK 130/PMK.010/2020
The tax holiday regime grants corporate income-tax reductions to pioneer industries: steel, refining, petrochemicals, certain digital infrastructure, and similar capital-intensive categories. Standard hotels are not on the pioneer list. A resort, a branded hotel, a wellness retreat — these generally do not qualify, and no amount of facilitation changes the industry classification. One further caution: the availability window of the tax-holiday scheme itself is policy-sensitive and has been the subject of extension decisions; the post-2025 status of the window is something we have not been able to verify from published sources. Check the current PMK directly rather than relying on any secondary summary, including this one.
Tax allowance — PP 78/2019
This is the instrument with a genuine, if narrow, chance of relevance. PP 78/2019 provides investment allowances — accelerated depreciation, an additional deduction on invested capital, extended loss carry-forward, reduced dividend withholding — for investments in specific KBLI business lines, sometimes restricted to specific regions listed in the regulation’s annexes. Eligibility is a two-key lock: your exact KBLI code must appear in the annex, and where the annex imposes a regional condition, your location must match. Whether a given hospitality KBLI in Kabupaten Manggarai Barat appears in the current annexes is a document-level check that must be run against the regulation text and confirmed through OSS at application time. We have found no published confirmation either way for Parapuar projects, and no one — not BPOLBF, not a consultant, not this site — can assure eligibility before that check is done.
Super deductions — PMK 128/2019 and PMK 153/2020
Two general instruments may interest hospitality operators regardless of location. PMK 128/2019 allows a deduction of up to 200% of costs for qualifying vocational training programs — relevant if a hotel runs structured apprenticeships or training partnerships, which in a tight labour market like Flores is plausible operationally as well as fiscally. PMK 153/2020 offers up to 300% deduction for qualifying R&D conducted in Indonesia; most hotel projects will find this harder to use, though product-development work in wellness or eco-tourism formats might conceivably qualify. Both schemes have their own approval processes and documentation standards. Neither has anything to do with Parapuar specifically.
OSS-level facilities, including import duty on capital goods
Import-duty exemption on machinery and capital goods for approved investment projects exists as a general facility applied for through the OSS/BKPM system under Ministry of Finance rules. Tourism-sector projects have historically accessed versions of this facility, but the qualifying categories and procedures change, so treat it as an application to be made and won, not an entitlement. Again: this is a national channel open to a hotel in Surabaya on identical terms. Parapuar adds nothing to it and subtracts nothing from it.
What Parapuar’s promoters actually promise
To be fair to BPOLBF, its public materials are mostly careful on this point — they promise process, not money. The atomic facts, with flags where the record is thin:
- KEK status
- Not a KEK. No establishing Peraturan Pemerintah exists; PP 40/2021 facilities do not apply.
- Legal basis of the zone
- Perpres 32/2018, establishing BPOLBF as the tourism authority body — a governance instrument, not a fiscal one.
- Land offer
- HPL Zone 1 of approximately 129.6 hectares, certificate handed to BPOLBF on 15 September 2023; often mis-rendered as “129,609 hectares” in English reports due to a decimal-format error. 19 lots offered to investors.
- Promised to investors
- Facilitation, coordination with ministries, and “clean and clear” land legality on the HPL lots. That is the published offer in full.
- Parapuar-specific fiscal incentive
- None has been publicly promised, announced, or documented. Zero.
- Published lot pricing or tenure terms
- None. No tariff schedule, no lease-term document; commercial terms emerge only from direct negotiation with BPOLBF.
- Committed investment reported
- US$16.2 million total: Dusit at US$15 million on Lot 1.6 and Eiger at US$1.2 million — both figures single-source (April 2025 reporting) and UNVERIFIED at contract level.
Notice what is absent. There is no incentive line in that list because there is no incentive in the public record. If anyone — an intermediary, an adviser, even an enthusiastic official in conversation — suggests a tax break can be “arranged” for a Parapuar lot, ask for the regulation number and the published basis. None currently exists, and this site will never imply one can be procured.
What is simply unpublished
Candor requires listing the gaps, not papering over them. As of mid-2026 the following have no publicly accessible answer: the exact legal instrument and term in years for investor rights over BPOLBF’s HPL lots; any lot-level pricing; whether any current annex of PP 78/2019 covers hospitality KBLI codes in Manggarai Barat; the post-2025 operational status of the tax-holiday window; and the identities of the three to four committed investors beyond Dusit and Eiger that BPOLBF has referenced. These are not details we declined to research. They are details nobody has published. An investor’s diligence file should treat each one as an open item to be closed in writing with BPOLBF, the tax office, or counsel — not assumed.
Parapuar, Golo Mori, and the KEK question next door
Golo Mori, the ITDC-developed estate roughly 45 minutes southeast of Labuan Bajo, has been proposed as a tourism KEK — but proposed is not established. Until a Peraturan Pemerintah issues and the zone appears on the Dewan Nasional KEK register, Golo Mori carries no KEK facilities either, and as of our research date we found no such PP. The practical upshot for anyone comparing the two: neither state-backed zone near Labuan Bajo currently offers KEK fiscal treatment, so the comparison turns on land model, developer structure, and location rather than tax. We run that fuller comparison, including private town land at market prices, in Parapuar vs Golo Mori vs town land.
If Golo Mori’s KEK proposal ever succeeds, the calculus around it changes materially — which is exactly why we track designation status rather than repeating year-old announcements as fact. Watch the register, not the press release.
How to verify eligibility without relying on a promise
A sensible verification sequence, stated as information rather than advice. Lock down your exact 5-digit KBLI code first, because every instrument keys off it — 55110 for star-rated hotel accommodation is the usual anchor for a hotel project. Then read the current annexes of PP 78/2019 against that code and against Manggarai Barat. Then confirm the live status of any super-deduction or import-facility application path inside OSS-RBA. Finally, get whatever BPOLBF tells you about facilitation in writing, and treat verbal assurances about taxes as worth exactly what they cost. A licensed Indonesian tax adviser can run this entire sequence in days; the documents are public even where the answers are unglamorous.
If you would like a starting point, tell us what you are planning at Parapuar and we will point you to the right primary sources and, where useful, introduce a licensed tax professional. We are an editorial site, not advisers, and the introduction is free.
Frequently asked questions
Is Parapuar a special economic zone (KEK)?
No. Parapuar is a tourism development area managed by BPOLBF under Perpres 32/2018. It has no KEK-establishing Peraturan Pemerintah, so the KEK fiscal facilities in PP 40/2021 — income-tax reductions, VAT facilities, customs exemptions — do not apply there.
Can a hotel at Parapuar get an Indonesian tax holiday?
Generally no. The tax holiday under PMK 130/PMK.010/2020 targets pioneer industries, and standard hotels do not appear on the pioneer list. The scheme’s own availability window after 2025 is also policy-sensitive, so anyone exploring it should check the PMK currently in force rather than older summaries.
Does the tax allowance under PP 78/2019 apply to Parapuar projects?
Possibly, but only case-by-case. PP 78/2019 grants investment allowances when a project’s exact KBLI code appears in the regulation’s annexes, sometimes with regional conditions attached. Whether a hospitality KBLI qualifies in Manggarai Barat must be confirmed against the current annex text and through OSS — no blanket answer exists, and none should be assumed.
Has the government promised any incentive specific to Parapuar lots?
No. Published BPOLBF and ministry materials promise facilitation, coordination, and “clean and clear” HPL land legality. No Parapuar-specific tax break, duty exemption, or fiscal facility has been announced in any public document we could locate.
Could Parapuar become a KEK in the future?
In theory any area can be proposed, but designation requires a formal process ending in a Peraturan Pemerintah, and we found no public record of a Parapuar KEK proposal. Nearby Golo Mori has been floated as a tourism KEK candidate without an establishing PP so far. Treat any future change as unconfirmed until it appears in the official register.
The bottom line
Parapuar’s investment case has to stand without tax sweeteners, because none are on offer. What the zone provides is state-held land with clean title above a fast-growing destination, a single counterparty in BPOLBF, and a facilitation promise — while pricing, tenure, and any general-instrument eligibility remain items you must establish yourself, document by document. That is a thinner brochure than a KEK, but it is the true one. Ask us for the verification checklist and a referral to a licensed Indonesian tax adviser if you want the document-level work done properly. If you use our free help and proceed with a professional we introduce, that professional may pay us a referral fee at no extra cost to you. Nothing on this page is tax or legal advice, and nothing about Parapuar should be priced on incentives that do not exist.