PFII Not Relying on State Budget: Initial Capital from Danantara, Investors, and State Assets

The International Financial Centre Indonesia (PFII) Law was officially enacted on 21 July 2026, stipulating the sources of initial capital for the PFII Management Agency. Article 24 of the law states that the initial capital will come from the Daya Anagata Nusantara Investment Authority (BPI Danantara), business entities, granted state or regional assets, and other legitimate funding sources. Finance Minister Purbaya Yudhi Sadewa emphasised that the PFII will not be fully dependent on the state budget (APBN); primary funding will originate from investors and Danantara. This decision was made amid existing fiscal pressures, with a wide state budget deficit and continuously rising government spending. By not fully burdening the state budget, the government hopes the PFII can become a global financial centre without worsening the nation’s fiscal position.

However, this strategy also carries its own risks, as Danantara must be capable of attracting investors and managing special investments effectively. The PFII is designed as a special zone providing international financial services, including banking, insurance, and capital markets, with more flexible regulations to attract global financial firms. Fiscal incentives and licensing ease are expected to enable it to compete with financial hubs like Singapore and Hong Kong. The initial capital from Danantara constitutes a special, non-temporary investment, while the business entities and granted state assets will become assets of the PFII Management Agency. The PFII Board is required to submit a work plan and budget to the President no later than 30 days after the capital is disbursed, including pre-operational costs and the establishment of supporting institutions such as the Financial Services Supervisory Agency and the PFII Court.

Interestingly, operational financing for the PFII Advisory Board and Court can still be sourced from the state budget, indicating that the state continues to provide a safety net for supervisory and judicial functions. This move signals a shift in the financing model for national strategic projects from an APBN-dominated model towards an ‘asset-light government’ model by leveraging state-owned investment enterprises and private sector participation. The impact is broad: the PFII will create a new financial ecosystem in Indonesia, attract a global skilled workforce, and potentially increase revenue from financial services. However, a major challenge lies in execution. Danantara, as an investment authority, must possess the credibility and capacity to manage investment funds and convince foreign investors. The success of the PFII is also heavily dependent on the stability of the rupiah exchange rate, currently at 17,935 per US dollar, and persistently high global interest rates, with the Fed Funds Rate at 3.63%. In this context, the inflow of US$8.5 billion in foreign capital into government securities (SBN) and Bank Indonesia Rupiah Securities (SRBI) in the second quarter of 2026 indicates positive foreign interest in Indonesian financial instruments, but does not yet guarantee interest in the PFII.