PFII: Indonesia’s New Financial Era & How the Market Is Responding

In recent years, the government has continued to work to enhance Indonesia’s appeal as an investment destination. Various policies have been implemented, ranging from regulatory reforms and the provision of fiscal incentives to the development of economic zones, all of which are expected to create a more competitive business climate. These efforts are now continuing with the establishment of the Indonesia International Financial Center (Pusat Finansial Internasional Indonesia / PFII), a zone designed to strengthen the national financial services ecosystem while enhancing Indonesia’s competitiveness on the global stage.

On July 21, 2026, the Indonesian House of Representatives (DPR) officially passed the Law on PFII during the 26th Plenary Session of the Fifth Legislative Session. Through this initiative, the government aims for Indonesia to become a hub for international financial services capable of attracting more investors, global financial institutions, and capital inflows into the country. For capital market investors, the establishment of the PFII is more than just a regulatory change. Its presence has the potential to influence investment flows, open up opportunities for a number of business sectors, and present various challenges that need to be closely monitored.

Image Source: Hukumonline.com

So, what exactly is the PFII, and why should investors pay attention to its development?

What is PFII?

PFII is a new world-class Special Economic Zone (SEZ) designed to serve as a hub for comprehensive financial services, ranging from banking, capital markets, and insurance to family offices and wealth management for global investors. Its establishment is mandated by Article 248A of Law No. 4 of 2026 concerning Amendments to Law No. 4 of 2023 on the Development and Strengthening of the Financial Sector (P2SK).

Finance Minister of Indonesia, Purbaya Yudhi Sadewa, explained that the PFII is built on three main pillars: expanding access to capital and foreign investment to support economic growth of up to 8%, building a modern financial services ecosystem, and enhancing national competitiveness through technology transfer and job creation. He emphasized that the PFII is not intended to replace the existing national financial system, but rather to complement it with international standards.

Bali as the Top Location Choice

Although other options such as IKN, Mandalika, Labuan Bajo, and Batam were briefly considered, the government is strongly leaning toward Bali as the location for the PFII, with two special economic zones that are already operational as the leading candidates:

1. Kura-Kura Bali Special Economic Zone (Serangan Island, 498 hectares): As of the first quarter of 2026, it has recorded IDR 1.62 trillion in realized investment and created 2,146 jobs. The long-term investment target for this zone is IDR 104.4 trillion [1][2].

   
   

2. Sanur Health Special Economic Zone: Has recorded IDR 5.37 trillion in realized

   investment and created 5,444 jobs as of the same period [3].

However, recent developments suggest that the government has not yet finalized the official location of the PFII. Finance Minister Purbaya stated that the location will be determined only after the issuance of the relevant Government Regulation (GR) and is expected to be outside existing Special Economic Zones (SEZs) to prevent regulatory overlap.

Attractive Facilities Offered by PFII

Unlike typical economic zones, the PFII is designed with various special features intended to make it easier for global financial institutions to operate in Indonesia. The government is proposing a combination of fiscal incentives, regulatory simplifications, and more flexible governance to ensure that cross-border business activities can proceed more efficiently. Some of the incentives announced by the government include [4][5]:

Facilities	Description
Tax Incentives	The potential for a reduction in Corporate Income Tax (PPh) of up to 100%—or an effective rate of 0%—for a maximum of 50 years for businesses that meet the requirements. In addition, Value-Added Tax (VAT) and Sales Tax on Luxury Goods (PPnBM) may be fully exempted for operational needs within the zone, along with various customs and excise incentives
Foreign Currency	Business activities in the PFII zone are designed to allow the use of foreign currency, making them more in line with international financial transaction practices.
English	English will be the language used in certain business activities within the PFII zone to facilitate interaction with global investors and financial institutions
Ease of Investment	The government is also providing benefits such as golden visas, streamlined immigration procedures, employment support, licensing, and residency arrangements for foreign professionals and investors.
Institutional Ecosystem	The PFII will have a board, a management body, a financial services supervisory body, an arbitration body, and a special court designed to facilitate faster dispute resolution in accordance with international practices. All of its key officials are appointed and dismissed directly by the President.

Although it offers various incentives, the government emphasizes that the policy will still be aligned with the 15% Global Minimum Tax (GMT) commitment. This means that the application of a lower tax rate does not automatically exempt companies from their international tax obligations if their effective tax rate falls below the globally agreed-upon minimum threshold.

Exposure to IDX-Listed Companies

Since discussions about PFII have turned to Bali, a number of stocks on the Indonesia Stock Exchange (IDX) have begun to respond with significant price movements. The following are some listed companies or sectors that have the potential to gain direct exposure:

1. BUVA and MINA

These two stocks are in the spotlight because they hold assets in locations projected to become PFII zones. PT Sanurhasta Mitra Tbk. (MINA) is considered to benefit the most because it owns a 4-hectare developed landbank in the Sanur area, directly adjacent to the Sanur Health Special Economic Zone. PT Bukit Uluwatu Villa Tbk. (BUVA) stock briefly surged more than 13%, and MINA rose nearly 10% during a single trading day in early July 2026, with cumulative gains of more than 20% over five days.

2. DSSA and EXCL

PT Dian Swastatika Sentosa Tbk. (DSSA), through its subsidiary, injected capital of approximately Rp8.5 trillion into an entity that controls about 24.57% of the shares in PT XLSMART Telecom Sejahtera Tbk. (EXCL). This strengthening of the digital and telecommunications ecosystem is seen as a key factor in supporting the connectivity infrastructure of the new financial district.

3. BALI

As a Bali-based provider of telecommunications tower infrastructure, PT Bali Towerindo Sentra Tbk. (BALI) stands to benefit from increased demand for digital infrastructure as the region develops.

4. Major Banking Companies (BBCA, BMRI, BBRI, BBNI)

Although they may not necessarily operate directly within the PFII zone, major national banks are said by some groups—such as Perbanas [6][7]—to have the potential to benefit from financial market deepening, connectivity with global investors, and new business opportunities stemming from closer ties between the domestic banking sector and foreign financial institutions.

5. Companies in the Construction and Real Estate Sectors

The development of physical infrastructure to support the financial district has the potential to serve as a catalyst for both state-owned and private construction companies with project portfolios in Bali, given the need to build office buildings, financial facilities, and other supporting infrastructure within the district.

6. Securities Firms and Capital Market Support Services

The establishment of PFII has the potential to open up new business opportunities for domestic securities firms and investment managers seeking to expand their services to foreign institutional clients, given that this region is designed to serve as a gateway for global investors looking to invest in Indonesia and the surrounding region.

Parties That Need to Be Vigilant and the Looming Risks

Behind the optimism, a number of economists and research institutions are warning of potential negative impacts that could affect listed companies and domestic businesses:

1. Round-tripping and Tax Haven Risks: Universitas Indonesia School of Economics and Business Professor, Telisa Falianty, cautioned that without requirements for actual economic activity, the PFII zone risks being used merely as a place to park funds or as a scheme to transfer domestic capital overseas before it re-enters the country as “foreign investment” in order to take advantage of tax-free benefits [8].

   
   

2. Enclave Economy: Syafruddin Karimi, a professor at the Faculty of Economics and Business, Universitas Andalas, highlighted the regulation prohibiting PFII operators from conducting transactions with the domestic market or retail customers outside the region. According to him, this provision risks confining capital to circulate only within the region without having a tangible impact on the national real sector [9].

   
   

3. Threats to Green Investment: The Center for Economic and Law Studies (Celios) believes that the PFII’s governance structure, which prioritizes flexibility and confidentiality, may be less competitive in the eyes of investors in energy transition financing, who generally seek jurisdictions with regulatory certainty and strong governance [10].

   
   

4. Overlapping Oversight: The establishment of a separate Financial Services Supervisory Agency within the PFII raises questions about the boundaries of its authority relative to the Indonesian Financial Services Authority (OJK), particularly regarding who is responsible in the event of a bank failure, a liquidity crisis, or systemic risks that spread to the domestic market [11].

   
   

5. Initial Capital Risk from Danantara: The initial capital for the PFII Management Agency could potentially come from the Danantara Investment Management Agency or from state-owned enterprise assets; according to some observers, this should be accompanied by an independent feasibility study, exposure limits, and clear public audit mechanisms, given the extensive authority of the PFII Board, which reports directly to the President [12].

The success of the PFII will ultimately be determined not only by the size of the incentives offered, but also by the region’s ability to attract new economic activities that truly add value to Indonesia. For investors, regulatory developments, site selection, and the response of industry players will be factors worth keeping a close eye on in the coming months.

The big question now is no longer whether Indonesia will have an international financial center, but rather whether the PFII can serve as a catalyst to strengthen the competitiveness of the national financial market amid increasingly intense global competition.

References

[1] Pemerintah Siapkan KEK Kura-Kura Bali sebagai Financial Center, https://news.ddtc.co.id/berita/nasional/1819159/pemerintah-siapkan-kek-kura-kura-bali-sebagai-financial-center

[2] KEK Sanur dan KEK Kura Kura Bali, Sebuah Transformasi Pariwisata di Provinsi Bali, https://kek.go.id/media/press/KEK-Sanur-dan-KEK-Kura-Kura-Bali-Sebuah-Transformasi-Pariwisata-di-Provinsi-Bali-360

[3] Pemerintah Siapkan Bali Jadi Pusat Keuangan Internasional, Pengembangan KEK Kura Kura Bali dan Sanur Dipercepat, https://kek.go.id/id/media/press/pemerintah-siapkan-bali-jadi-pusat-keuangan-internasional-pengembangan-kek-kura-kura-bali-dan-sanur-dipercepat

[4] PFII Tawarkan Tax Holiday 50 tahun, Salah Satu Terpanjang di Dunia, https://www.cnbcindonesia.com/news/20260724091611-4-753482/pfii-tawarkan-tax-holiday-50-tahun-salah-satu-terpanjang-di-dunia

[5] Purbaya Beberkan Sederet Keuntungan PFII, Apa Saja?, https://money.kompas.com/read/2026/07/21/084000226/purbaya-beberkan-sederet-keuntungan-pfii-apa-saja-?page=all

[6] Perbanas Soroti Dampak PFII Terhadap Sistem Keuangan & Perbankan, https://www.bloombergtechnoz.com/detail-news/114508/perbanas-soroti-dampak-pfii-terhadap-sistem-keuangan-perbankan

[7] Perbanas berharap PFII ciptakan nilai tambah bagi ekonomi RI, https://www.antaranews.com/berita/5643009/perbanas-berharap-pfii-ciptakan-nilai-tambah-bagi-ekonomi-ri

[8] Pusat Finansial Internasional, Antara Tarik Modal Global dan Risiko Jadi “Tax Haven”, https://money.kompas.com/read/2026/07/08/150008226/pusat-finansial-internasional-antara-tarik-modal-global-dan-risiko-jadi-tax?page=all

[9] Ekonom Ingatkan Dana PFII Jangan Hanya Berputar di Sektor Keuangan, https://money.kompas.com/read/2026/07/14/172023226/ekonom-ingatkan-dana-pfii-jangan-hanya-berputar-di-sektor-keuangan.

[10] Pengamat: RUU PFII Berpotensi Hambat Investasi Hijau ke RI, https://www.bloombergtechnoz.com/detail-news/114648/pengamat-ruu-pfii-berpotensi-hambat-investasi-hijau-ke-ri

[11] Tarik Dana Global, Pemerintah Diminta Waspadai Risiko Tata Kelola dan Pengawasan PFII, https://nasional.kontan.co.id/news/tarik-dana-global-pemerintah-diminta-waspadai-risiko-tata-kelola-dan-pengawasan-pfii

[12] Modal Awal PFII dari Danantara Berpotensi Tingkatkan Risiko dan Reputasi, https://money.kompas.com/read/2026/07/13/160338526/modal-awal-pfii-dari-danantara-berpotensi-tingkatkan-risiko-dan-reputasi

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Disclaimer: This content is created for educational purposes or service promotion, and does not constitute a recommendation to buy or sell any specific Securities. Any risks arising from investment decisions made based on the information in this publication are the sole responsibility of the respective audience. PT KAF Sekuritas Indonesia is licensed and supervised by the Financial Services Authority (Otoritas Jasa Keuangan / OJK).