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Indonesia expects its proposed international financial centre to attract investments of between IDR 300 trillion and IDR 500 trillion (USD 16.7 billion–USD 27.8 billion), according to a senior Finance Ministry official. Announced in the past week, the project is intended to encourage the establishment of new foreign bank branches and business entities, although the location of the financial hub has yet to be finalised. The Indonesian government is currently deliberating legislation that will govern the project, including its legal framework and tax incentives. Proposals under discussion include full corporate income tax exemptions for eligible businesses and value-added tax (VAT) exemptions on goods and services within the financial centre, as the government seeks to strengthen Indonesia's position as a regional financial hub.
Indonesia's proposed international financial centre is expected to attract investments ranging between IDR 300 trillion and IDR 500 trillion (USD 16.7 billion–USD 27.8 billion), according to a senior official from the country's Finance Ministry. The estimate was announced in the past week as the government continued preparations for the planned financial hub.
Finance Ministry official Herman Saheruddin said the investment could come in various forms, including the establishment of new branches by foreign banks and the creation of new business entities operating within the financial centre.
The government has yet to determine the location of the proposed development. Officials are continuing discussions on the project's structure while a bill governing the establishment and operation of the financial centre is being considered by Indonesian lawmakers.
The proposed legislation is expected to define the legal and regulatory framework for the project, including tax incentives and other measures intended to attract international financial institutions and businesses.
According to earlier discussions involving legislators and economic experts, the incentives under consideration include a full exemption from corporate income tax for qualifying businesses operating within the financial centre. The proposals also include exemptions from value-added tax (VAT) on goods and services transacted inside the designated financial district.
The government views the financial centre as part of its broader strategy to strengthen Indonesia's financial services sector and enhance its appeal as a destination for international investment. By offering competitive fiscal and regulatory incentives, the project is expected to encourage greater participation from global financial institutions and multinational companies.
While the legislative process remains underway, the government has not announced a timeline for selecting the location or commencing development of the financial centre. Further details on the project's implementation are expected once the proposed law governing the initiative is finalised and approved.
Source - Reuters
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