JAKARTA - Finance Minister Purbaya Yudhi Sadewa has ensured that the government will prepare tax incentives for foreign investors who invest in the Indonesian International Financial Center (PFII).
The incentive scheme will be designed by referring to best practices implemented in various international financial centers so that PFII has global competitiveness.
"Later we will see the most, all the incentives that make this PFII more competitive internationally," he told the media after a working meeting with Commission XI of the DPR, Thursday, July 2.
According to Purbaya, the government will study various incentive models implemented in international financial centers (International Financial Center/IFC), especially those in special economic zones or enclaves, not those that apply nationally.
He added that one of the main references was the Abu Dhabi Global Market (ADGM) in the United Arab Emirates, because the model was more relevant to be applied in Indonesia because the incentives only applied in certain areas, unlike Singapore whose financial sector policy was applied nationally under the Monetary Authority of Singapore.
"We see what it is like abroad. One of them is Dubai, Abu Dhabi. But Singapore also seems to be like that, but one country is different. We will find examples of countries that are small enclaves such as Dubai and financial centers like that," he explained.
In addition, he cited the Dubai International Financial Centre (DIFC) which offers various facilities for investors, including corporate tax rates of up to 0 percent for certain types of income.
"We will not follow the example of Singapore. We will look for other countries that have enclaves, not one country, Singapore is one country. If it's like Abu Dhabi or Dubai, it's a small enclave, 100 square kilometers there, it applies, not national," he added.
Previously, Purbaya had also conveyed plans to implement a similar incentive scheme when discussing the development of the Bali Financial Special Economic Zone (KEK) which is now focused on as a PFII.
The PFII is planned to be built in an area of around 100 hectares with a special legal framework that is different from other regions of Indonesia and the concept adopts a system applied in international financial centers such as ADGM and DIFC.
"The incentive will later be used according to international standards. It is about 100 hectares of KEK there, common law is there, the way Abu Dhabi, Dubai. Outside of it, our law is usual. There it is too, in 100 hectares it is common law, outside of it is sharia law. We can also do that. Later when it comes in, the money can be invested anywhere in Indonesia," he said in a media discussion at the Ministry of Finance Office, Monday, May 4.
Purbaya even emphasized that the government was ready to provide incentives in the form of tax rates of up to 0 percent if necessary to attract global capital flows to PFII.
According to him, the policy still provides benefits for the national economy even though it does not generate tax revenue directly.
He explained that the inflow of foreign investment funds would strengthen foreign exchange reserves, expand the source of development financing, and open opportunities for investors to invest in instruments such as government debt securities.
"If he asks me to give 0 percent. Why do I give it? It was not there. With that, zero is okay, but the money goes there. It should be linked to our foreign exchange reserves, too, it will strengthen. The funding source for development will also strengthen. Because they can buy government bonds. If he asks for a low interest rate, I will give the facility," he said.
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