JAKARTA - The government is preparing a special economic zone (KEK) in the financial sector in Bali whose concept will adopt the Dubai International Financial Centre (DIFC) model.
This area is targeted to become a new international financial center that is able to attract investment and foreign capital flows to Indonesia.
Minister of Finance Purbaya Yudhi Sadewa explained that the KEK is planned to be built on land of around 100 hectares with special regulations that provide ease and flexibility for global investors.
"What we will do is like in Dubai, 100 hectares or less. That makes a special economic zone," said Purbaya at a press conference, quoted on Friday, May 8.
He added that the financial KEK in Bali will use a certain legal system based on common law and provide ease for international capital flows.
Purbaya said that the government was also considering a special tax policy for foreign funds entering the region.
"Money can come from abroad to that place. I don't pay taxes," he said.
According to Purbaya, this policy is believed to be able to provide great benefits for the national economy, especially through increased investment and financing of various strategic projects.
He said that the funds that come in can be used to support investment projects in Indonesia, including the Danantara project and other real sectors that have promising prospects and investment return rates.
"The money there can be used to invest in Danantara projects which are many and have good returns or in projects outside the economic area with good prospects," he said.
In addition to direct investment, he added, foreign investors will also be given the opportunity to buy government bonds and this step is considered to be able to expand the investor base while strengthening national development financing.
Purbaya assessed that the existence of an international financial center has the potential to bring in new, cheaper and sustainable sources of funding, both for the government and the private sector.
He added that the government also opened the opportunity to provide various tax incentives as long as the funds were still placed in the financial center area.
"If during the financial center, you can get incentives, for example, ask for a tax incentive, I will give it. It's nothing," he added.
Purbaya said that despite offering various fiscal facilities, the government is optimistic that it will still receive state revenues when investments begin to generate profits and economic activities expand beyond the KEK area.
In addition, he added, the inflow of foreign capital in large amounts is also believed to help maintain the stability of the rupiah exchange rate amid global market uncertainties.
Purbaya said that currently the government is still perfecting the design and regulation of financial KEK in Bali before the project is realized in the near future.
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