Purbaya: International Financial Centre Unsuitable for IKN, Too Quiet

Finance Minister Purbaya Yudhi Sadewa has assessed that Nusantara Capital City (IKN) in East Kalimantan is not yet the right location for developing Indonesia’s International Financial Centre (PFII). According to him, the area is still too quiet and therefore unable to support the business ecosystem required by global investors. “Maybe not in IKN, it’s too quiet there,” Purbaya said at the Parliament Complex in Senayan, Jakarta, on Friday (3/7). As an alternative, the government is still reviewing several locations deemed more ready to become an international financial centre. One of the regions under consideration is Bali, although a final decision on the location has not been made. “Maybe in Bali. We are looking for the most comfortable place for international investors,” the finance minister stated. He explained that the government will choose the location best able to support the activities of global financial industry players, in terms of infrastructure, connectivity, and comfort for foreign investors. Furthermore, Purbaya said that developing the PFII area does not necessarily mean building all infrastructure from scratch. The government is also open to the option of utilising areas that already have adequate infrastructure so that development can be carried out more efficiently. “For the enclave, certain development is needed, maybe some basic infrastructure, or we will see whether to use a place that already has infrastructure or not. So the location is still open,” he said. Purbaya explained that the PFII concept differs from foreign direct investment (FDI). Funds entering the financial centre will be managed first before being allocated to various investment instruments, including strategic domestic projects. “We hope they can enter attractive domestic projects,” the state treasurer said. To attract global investors, the government is also preparing various incentives. Beyond tax incentives, the government will consider other policies that can enhance the competitiveness of Indonesia’s PFI compared to other international financial centres. “We will see, all incentives that make this PFI more competitive internationally,” he said. In formulating the scheme, the government will study practices implemented by several world financial centres. Purbaya cited Dubai and Abu Dhabi as references because they have international financial zones in the form of enclaves, unlike Singapore which is a city-state. “We will look for examples of countries with small enclaves like Dubai and other similar financial centres,” Purbaya said. Nevertheless, he stressed that the government will not simply copy another country’s model. The government will only adopt best practices that suit Indonesia’s conditions, particularly in maintaining the credibility and integrity of the financial system. “We copy the best practices in the world. But I want to see how they maintain the integrity of their financial system,” Purbaya concluded.