Three Financial Centers in Bali are Ready to Attract Global Funds

JAKARTA - Coordinating Minister for Economic Affairs Airlangga Hartarto revealed that the government plans to develop the International Financial Center (IFC) area in Bali.

Airlangga explained that the government is currently preparing the legal basis as well as the necessary infrastructure so that the international financial center can operate optimally.

"Our financial center is preparing the legal documents. So, we are preparing the infrastructure ecosystem," he told the media, quoted on Thursday, June 25.

According to him, the location of the IFC will be centered in Bali with the possibility of development in two to three different points in the region.

"We are ready in Bali. Meanwhile, in Bali it can be 2 or 3 points," he said.

Responding to the assumption that international financial centers can become tax havens, such as the provision of various incentives, and the opportunity to apply tax rates of up to 0 percent, Airlangga said similar practices were also applied in a number of countries that already had global financial centers, such as Dubai and Singapore.

"Tax havens are everywhere now. Yes, in Dubai there is also a tax haven. In Singapore there is also a tax haven," he explained.

He emphasized that the main objective of the establishment of the IFC is to increase the attractiveness of investment, especially foreign investment entering Indonesia.

Furthermore, Airlangga said that the existence of an international financial center has the potential to make Indonesia a competitive investment destination, as is the case in Singapore, Hong Kong, and the United Arab Emirates.

According to him, the value of investment that can be collected through the scheme has the potential to double compared to the realization of Indonesia's annual investment currently.

"If we now have traditional investments of around Rp2,200 trillion a year. Compare with Singapore, they can attract investments related to the financial center (equivalent) of Rp5,000 trillion," he said.

Airlangga assessed that Indonesia has greater investment potential and various strategic projects that require financing.

"Yes, Rp5.000 trillion, so the funds go to Singapore first before being distributed. Well, while the investment potential in Indonesia is large. Dubai financial center is also what we are talking about, they are around 800 billion US dollars, he said.

According to him, the number of international financial centers in the world is still relatively limited, so Indonesia needs to take advantage of the opportunity to become one of the main destinations for global capital flows.

"So, we have to draw the global picture. In the world, there are limited financial centers, only Singapore, Dubai, Hong Kong, then parts of America," he said.

Regarding the formation of the IFC committee council, Airlangga said the government would first complete the drafting of laws as a legal basis, and after that, various technical provisions and institutional structures would be further regulated.

"We will first form the law, then we will arrange the technicalities," he explained.