Strategic PFII to Strengthen Medium-Long Term Economic and Monetary Sector

JAKARTA - The House of Representatives (DPR) officially passed the Draft Law on the Indonesian International Financial Center (PFII) into law through a plenary meeting held in Jakarta, Tuesday, July 21, 2026. The PFII law is a mandate of Article 248A of Law Number 4 of 2026 concerning Amendments to Law Number 4 of 2023 concerning the Strengthening and Development of the Financial Sector (P2SK).

With the presence of the PFII Law, it will soon be regulated regarding general provisions, the establishment and institution of PFII, financial sector business activities and support, the establishment of arbitration institutions and PFII judicial courts, and central and regional government support.

According to the Head of Economics at PT Bank Permata Tbk, Josua Pardede, the urgency of PFII is quite strong as a long-term medium-term agenda because Indonesia needs sources of financing to support investment, infrastructure, green financing, climate financing, the development of the financial market, and strategic projects.

"From an economic perspective, PFII is important because Indonesia does not yet have an international financial area that has been specifically built with governance standards, institutions, legal certainty, and competitiveness equivalent to the world's financial centers," said Josua, Wednesday, July 22, 2026.

Meanwhile, when examined through the monetary side, continued Josua, the existence of PFII has the potential to increase the supply of capital and more stable foreign exchange. Regarding the special legal order in PFII, Josua assessed that it was not something that was contrary to a sovereign state. Provided that the special legal order remains under the constitution, national laws, and state supervision.

Josua said that many countries have special economic zones, special commercial courts, or financial centers with different rules to attract global actors. Therefore, it must be emphasized that there are not two legal jurisdictions, but specificity within the national legal system.

"The boundary line must be firm, PFII is reasonable when treated as a special rule for international financial transactions that require certainty, speed, and global standards," said Josua.

Josua also highlighted a number of priority issues with the presence of PFII, namely first about governance which must have an institution of management, supervision, consideration council, accountability mechanism, and reporting.

Second, the certainty that PFII does not weaken the authority of BI, OJK, LPS, the Ministry of Finance, and the Supreme Court. Josua said, cross-authority coordination must be clear, especially the supervision of banks, capital markets, foreign exchange, payment systems, consumer protection, taxes, and money laundering prevention.

Then third, explained Josua, a solid support is needed so that PFII does not trigger the dollarization of the domestic economy. Bank Indonesia is urged to ensure that PFII activities do not increase pressure on the rupiah, the uncontrolled parallel foreign exchange market, and do not encourage domestic actors to move funds from the rupiah system to the foreign exchange system.

Fourth, tax facilities must be measurable and benefit-based. For Josua, incentives can be given to attract global financial institutions and high-value-added activities with time limits, economic requirements, reporting obligations, and sanctions for abuse.

"Then the fifth, PFII must be directed to financing the real sector, not just a place to register financial companies," added Josua.

Josua revealed that PFII has a strong meaning if positioned as a means of deepening the financial market, attracting global capital, strengthening long-term financing, and reducing dependence on conventional financing.

To be known, PFII is an awareness of the Indonesian government as a large country and a member of the G20 that is considered necessary to have its own competent and globally competitive financial center. The Indonesian government feels that strengthening economic resilience and expanding development financing in the midst of uncertain global dynamics is a strategic necessity.

This way, Indonesia can become a new economic power in the world arena. PFII aims to be a foothold for Indonesia to strengthen the competitiveness of the financial sector as well as attract many investments and international financial activities into the country.