Legal Framework for Indonesia's Global Financial Centre Being Fast-Tracked
JAKARTA, KOMPAS — The government and the House of Representatives (DPR) are fast-tracking the deliberation of the Bill on the International Financial Centre (PFII), with a target for ratification this month. However, the acceleration of this strategic legislation demands strict anticipation of risks such as money laundering, regulatory arbitrage, and distortions in the domestic financial industry.
A DPR Plenary Session at the Parliament Complex in Senayan, Jakarta, on Thursday (2/7/2026), approved the proposal for the PFII Bill to be included in the 2026 Priority National Legislation Programme. This approval marks the initial step towards intensive discussion of the bill, which is touted as the foundation for Indonesia’s ambition to build an international financial centre.
Finance Minister Purbaya Yudhi Sadewa stated that the establishment of the PFII is part of the national financial sector transformation and a mandate of Law Number 4 of 2026 concerning the Development and Strengthening of the Financial Sector. He noted that international financial centres have become important instruments for many countries to attract investment, expand financing access, and drive financial sector innovation. Indonesia is considered to have strong capital to take on a greater role in the global financial ecosystem.
“Indonesia possesses all the prerequisites to develop into one of the international financial activity centres in the Asian region and the world,” Purbaya said during a working meeting with Commission XI of the DPR. He highlighted the country’s strong foundation, including its large economy, vast domestic market, strategic geographical position, natural resource wealth, and long-term growth prospects. However, Indonesia currently lacks an international financial zone specifically designed with governance standards, legal certainty, and competitiveness comparable to global financial centres like Singapore and the UAE.
The government is proposing the PFII as a special territory within the Unitary State of the Republic of Indonesia, granted specific authorities to support financial sector business activities, supporting financial services, and other economic activities that sustain the financial centre ecosystem. “Within certain limits, the PFII is allowed to adopt, implement, or adapt international commercial law principles and international standards that have proven to support efficiency and certainty in global business activities,” Purbaya explained.
The PFII is designed to be a catalyst for deepening the national financial sector, developing financial service innovations, increasing investment, and financing national strategic projects and priority sectors. The government also hopes the PFII will strengthen sustainable financing and increase the financial sector’s contribution to economic growth. The draft law includes various facilities to attract global investors, ranging from licensing ease, immigration and residency facilities, employment, to tax incentives. The government is also proposing the establishment of a special PFII court authorised to examine and decide business disputes within the zone, including international commercial disputes.
Commission XI Chairman Mukhamad Misbakhun stated that the first-level discussion is targeted for completion by 20 July 2026. The bill will then be brought to a plenary session the following day for second-level decision-making. He explained that the acceleration is unavoidable as the DPR only has about 20 effective days before the session period ends on 22 July. A working committee has been formed to expedite the deliberation, with the DPR promising continued public and stakeholder participation.
Deputy Chairman of the Legislation Body Martin Manurung explained that the government aims for the PFII to become an instrument to strengthen Indonesia’s competitiveness as an international financial centre while deepening the national financial sector. “The PFII is expected to encourage financial sector innovation, attract domestic and global investment, facilitate real sector and strategic project financing, and strengthen the financial sector’s contribution to the national economy,” Martin said.
Coordinating Minister for Economic Affairs Airlangga Hartarto previously assessed that the potential funds that could be raised through the PFII are substantial. He compared Indonesia’s current annual investment realisation of around Rp 2,000 trillion to Singapore’s financial centre, which can attract capital flows of up to Rp 5,000 trillion. “Global capital entering through the PFII is expected to become a new source of financing for national strategic projects and the real sector,” he stated.
However, the significant opportunities are accompanied by considerable risks. Economist Wijayanto Samirin from Paramadina University cautioned that the establishment of the PFII must be accompanied by strong governance, strict supervision, and an adequate risk mitigation system. He warned that the PFII could potentially open pathways for illicit funds if the institutional and supervisory design is not carefully crafted, especially with plans to introduce instruments such as family offices and global asset management services.