DPR Says PFII Law Makes Indonesia More Competitive in Attracting Global Investment

The House of Representatives (DPR) has described the ratification of the International Financial Centre Indonesia (PFII) Law as a crucial milestone in strengthening Indonesia’s position amid global competition for investment flows. Mukhamad Misbakhun, Chair of the DPR’s Commission XI, stated that this policy, initiated by the President, is part of a national economic transformation to make Indonesia a prime destination for international capital. He explained that the PFII Law does not merely focus on establishing a financial zone or providing investment incentives. More than that, the regulation is designed to build an institutional foundation capable of delivering legal certainty, regulatory efficiency, and a competitive business climate for global investors. “PFII is a transformative initiative. This is a good step taken by the President to bring global capital into Indonesia. We can no longer rely solely on domestic financing sources if we want to leap forward to become a developed country,” Misbakhun said at the Parliament Complex in Senayan, Jakarta, on Friday (24/7). He assessed that competition between countries in attracting investment is increasingly tight, requiring Indonesia to have instruments that can enhance its competitiveness against various international financial centres in the region and the world. According to Misbakhun, the ratification of the PFII Law is part of a long-term strategy to make the financial services sector a driver of economic growth. Indonesia is considered to have strong economic fundamentals but has not yet fully succeeded in optimising this potential to attract international investment on a larger scale. “If we want Indonesia to move up a class, then we must build institutions that are also world-class. PFII is one of the instruments to answer that challenge,” he said. He hopes the presence of PFII can expand access to development financing, deepen the domestic financial market, and strengthen Indonesia’s position in the global investment network. Beyond encouraging investment inflows, Misbakhun believes the PFII is also expected to have a broader economic impact. These benefits include the creation of quality jobs, the development of a modern financial services industry, increased technology and knowledge transfer, and additional value-added economic activity within the country. “What we want to build is not just capital flows, but a new economic ecosystem capable of creating a multiplier effect for the national economy,” he said. However, he cautioned that the effectiveness of the PFII Law’s implementation depends heavily on the quality of the implementing regulations drafted by the government. These derivative regulations need to be designed simply, credibly, and provide certainty for investors while still upholding the principles of good governance. He noted that international investor confidence is determined not only by the size of the incentives offered but also by legal certainty, regulatory quality, economic stability, and government policy consistency. “If the entire ecosystem functions well, I am optimistic that PFII will become an important lever to increase Indonesia’s competitiveness in attracting international investors,” he said. Misbakhun also stressed the importance of a competitive incentive package so that PFII has appeal compared to other international financial centres. However, he reminded that these incentives must be provided in a measured way and focused on attracting new investments that add value to the national economy, rather than merely relocating business activities or company registrations to the PFII area. Previously, the DPR RI, in a Plenary Meeting, approved the Bill on the International Financial Centre Indonesia to become law. This regulation is expected to serve as a legal foundation for developing an international financial centre capable of strengthening the financial sector, enhancing national economic competitiveness, and supporting Indonesia’s long-term economic growth targets.