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View all search resultsGovt banks on Rp 500t inflows to international financial center
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On the rise: High-rise buildings are illuminated by the sunset on Aug. 2, 2024, in the Sudirman Central Business District in South Jakarta. (Reuters/Ajeng Dinar Ulfiana)
T
he planned Indonesia International Financial Center (PFII) will attract massive foreign capital inflows, the government has claimed, but economists view that as a long-term aspiration rather than a realistic near-term goal, pointing to the challenges of taking on global hubs with long-term track records.
Finance Ministry financial sector stability and development director general Herman Saherudin said on Wednesday the PFII could draw between Rp 300 trillion (US$16.6 billion) and Rp 500 trillion in funds from international investors based on “moderate estimates”.
“But, once again, it depends on our assumption, because we’re competing with Singapore, Dubai and others,” Herman said following a hearing on a PFII bill with House of Representatives Commission XI, which oversees financial affairs.
The PFII plan is benchmarked against similar projects in other countries, like the United Arab Emirates’ Dubai International Financial Centre (DIFC), Malaysia’s Labuan International Business and Financial Centre and Kazakhstan’s Astana International Financial Centre.
Herman suggested the inflows would take shape in foreign banks opening branch offices in the area or establishing a company, which the PFII would make possible because the financial center would not limit foreign ownership, unlike the prevailing regulations that cap foreign held stakes at a certain percentage in many business fields.
In a separate hearing with the commission, Financial Services Authority (OJK) chief executive for banking supervision Dian Ediana Rae underscored the importance of preventing a “crowding out” of domestic financial services.
“Financial service activities inside the PFII have to remain oriented toward international financial activity and not become a competitor of domestic financial services,” Dian said.
