Government Finalises International Financial Centre Bill, Targets Rp 500 Trillion Investment

The government projects that the establishment of the Indonesia International Financial Centre (PFII) will become a new magnet for global capital. This special economic zone for the financial sector is estimated to absorb foreign investment ranging from Rp 300 trillion to Rp 500 trillion. However, Director General of Financial Sector Stability and Development at the Ministry of Finance, Herman Saheruddin, noted that this figure is a moderate initial calculation. The realisation will depend heavily on the PFII’s competitiveness when juxtaposed with other established global financial centres. “Based on our moderate calculations, investment could be around Rp 300 trillion to Rp 500 trillion. But once again, this depends on assumptions because we are competing with Singapore, Dubai, and others,” Herman stated during a meeting at the Parliament Complex in Jakarta on Wednesday. This substantial investment flow is expected to come from global investors who establish their business operations within the PFII area. Herman cited examples such as foreign capital entering through the establishment of branch office networks for foreign banks or international-scale incorporated corporations within the zone. Beyond acting as a bridge to attract direct foreign capital, the PFII also carries another strategic mission. The zone is projected to open access to long-term funding crucial for financing a number of National Strategic Projects. Amidst the various attractive facilities to be offered to prospective business actors, the Ministry of Finance has assured that Indonesia will not sacrifice compliance with international regulations. Herman emphasised that the government will remain subject to global taxation rules, including the Global Minimum Tax provisions. Consequently, the government is committed to not excessively providing incentives that risk triggering a race to the bottom, a condition where countries lower regulatory standards to compete for investment. Global Minimum Tax compliance will remain the primary reference for the fiscal system in the zone. The PFII will implement rigid international supervisory standards to anticipate risks of money laundering and misuse of investment facilities. All prospective business actors intending to enter must pass a strict screening process in accordance with international regulatory standards. Currently, the government and the House of Representatives are intensifying discussions on the PFII Bill as the primary legal foundation. This regulation is considered a strategic stepping stone to deepen the national financial sector while boosting Indonesia’s bargaining position on the global stage. Minister of Finance Purbaya Yudhi Sadewa revealed that various red-carpet treatments have been prepared to attract global investors, ranging from immigration and employment ease, residency rights, and licensing, to tax relaxations. Notably, to guarantee security for major business players, the government is proposing the establishment of a Special PFII Court as a guarantee of international-standard legal certainty. According to Purbaya, this special judicial institution will hold full authority to examine, adjudicate, and decide all forms of disputes arising from business activities within the PFII area, as well as international commercial disputes strongly linked to the zone.