War Leaves Investors Frantically Seeking Safe Havens; Is Indonesia's PFII Ready to Welcome Them?

Finance Minister Purbaya Yudhi Sadewa has stated that global investors are currently plagued by high uncertainty when deciding where to allocate capital to drive economic growth. The cause is the unrelenting war in various places, including the Middle East, which is heating up after the United States and Iran resumed armed attacks on each other. This high demand for a safe haven for global investment is, according to Purbaya, increasing the need for the development of international financial centres, prompting Indonesia to establish the Pusat Finansial Internasional Indonesia (PFII). “We see that uncertainty has not disappeared; the US is still attacking Iran. So there is demand for a new global financial centre, and we want to capitalise on that,” Purbaya said on the sidelines of the July edition of the State Budget press conference at his office in Jakarta, quoted on Thursday (23/7/2026). “Because the higher the uncertainty, the higher the demand for financial centres. But if everything is calm and peaceful, it will be increasingly difficult for us to compete,” he stressed. To attract global investor funds into the PFII, the government is providing tax facilities that can compete with other global financial centres. One concept under consideration is an income tax exemption for up to 50 years. “We are comparing business practices in other similar places, and we are slightly more attractive because we are the last to enter. We are competing with Singapore, Hong Kong, Dubai, and others; if we are not more attractive, they will not come,” he asserted. With the tax and non-tax facilities that the government will offer, Purbaya is confident that global investors seeking a safe place to invest their capital will choose the PFII, following the passage of the PFII Bill into law at the DPR plenary session on 21 July 2026. “I think with a proposal like that, it will be more attractive compared to Dubai, Hong Kong, and Singapore,” Purbaya said. Purbaya’s statement aligns with the assessment of PT Kredit Rating Indonesia (KRI), which considers the enactment of the PFII Law a potential strategic step in deepening the national financial market and enhancing Indonesia’s competitiveness as a destination for international financial activities. KRI Managing Director Syaiful Adrian said the existence of an international financial centre could open opportunities for increased investment, diversification of financing sources, and the development of high-value-added financial services. “Conceptually, an international financial centre can bring together investors, financial institutions, business actors, and professional service providers in one integrated ecosystem. This has the potential to increase the efficiency of financial intermediation while encouraging the deepening of Indonesia’s financial market,” said Syaiful Adrian. According to him, the experience of several international financial centres shows that an integrated financial ecosystem can contribute positively to capital market development and expand financing options for businesses. Syaiful Adrian added that Indonesia has several economic fundamentals that support the development of an international financial centre, ranging from the large size of the domestic economy and a growing corporate base to high long-term financing needs. “Indonesia has a large domestic market and significant financing needs. If developed properly, PFII can become a means to expand funding alternatives for the productive sector and increase the competitiveness of the national financial services industry,” he said. Furthermore, Indonesia’s increasing integration with global financial markets is considered an important asset in attracting more investors and international financial industry players. However, KRI assesses that the success of the PFII is not solely determined by the establishment of an institution or a financial district but is highly dependent on the quality of implementation and policy consistency. “Legal certainty, good governance, consistent regulations, credible supervision, investor protection, and ease of doing business will be the main factors that build market confidence,” Syaiful Adrian said. According to him, market confidence is an essential foundation for international financial activities to grow healthily and sustainably. KRI also assesses that the success of the PFII needs to be measured by its impact on the real economy. These impacts include the PFII’s ability to attract long-term investment, expand financing access for the productive sector, improve the quality of the domestic financial market, and strengthen Indonesia’s position in regional and global financial networks. “Ultimately, the success of the PFII is not only seen from the amount of financial activity created but also from the extent to which its existence benefits the real sector and the national economy as a whole,” Syaiful Adrian said.