Indonesia has unveiled a new vision to transform the holiday island of Bali into a global finance hub inspired by destinations such as Dubai, Hong Kong and Singapore, but the tourist hotspot faces a raft of systemic and infrastructural hurdles before it can attain the lofty goal.
Indonesian Chief Economic Minister Airlangga Hartarto earlier this week said the government was finalising regulations to establish a financial hub in the Kura Kura Special Economic Zone (SEZ) on Serangan island, 500 metres south of Denpasar, the provincial capital of Bali.
Last month, President Prabowo Subianto said he was planning to set up a financial centre to capitalise on Indonesia’s status as a safe country, particularly amid the war in the Middle East.
“Indonesia is among the countries considered the safest if World War III ever breaks out. Just see how many Russians and Ukrainians are in Bali. We are planning to set up a special financial centre,” Prabowo said on April 8.
Haryo Limanseto, a spokesman with the Coordinating Ministry of Economic Affairs, said in a statement on Monday that Bali “could serve as a barometer for the financial sector”.
“The international financial centre [IFC] is a strategic step in strengthening national economic competitiveness,” Haryo said.
“Going forward, several strategic projects will be built in Kura Kura SEZ. As of the first quarter of 2026, the Kura Kura SEZ has recorded an investment realisation of 1.62 trillion rupiah [US$93 million], providing employment to 2,146 people.”
The Kura Kura SEZ targets a total investment of 104.4 trillion rupiah by 2029.
Bali Turtle Island Development, the developer of the 100-hectare (247-acre) SEZ, said the area was designed as “an integrated innovation ecosystem, which will optimise the capital of knowledge, education, and human resources as new drivers of economic growth in Bali”.
Rosan Roeslani, head of state wealth fund Danantara, said the fund would conduct a comparative study with “financial centres in Dubai, Abu Dhabi and Singapore” to ensure the competitiveness of the Bali IFC.
Finance Minister Purbaya Yudhi Sadewa also said on Monday he would offer incentives such as a “zero per cent tax rate”. He noted that Indonesia would benefit from stronger foreign reserves by having more global funds and companies operating in Bali, “as we will have more buyers of our bonds”.
According to Purbaya, the legal and regulatory framework in the new financial hub will also be similar to that of the Dubai International Financial Centre (DIFC).
DIFC is exempt from the United Arab Emirates’ civil and commercial laws but is still covered by “international standards and principles of common law”, its website states.
This is not the first time Jakarta has envisioned transforming Bali into a home for wealthy elites. In 2024, then chief investment minister Luhut Pandjaitan said the Hindu island would be a hub for family offices – private companies handling investments for wealthy families – with assets ranging from US$50 million to US$100 million.
The two plans appear to have confused officials in Bali. Its regional secretary Dewa Made Indra was quoted as telling Antara on Tuesday that he was “unclear” whether the IFC would be similar to a family office hub.
“If it only brings benefits to [Jakarta], but Bali does not get any, then I agree that it is not necessary here. If IFC and the family offices bring investments to Bali, then their investment will be directed towards green industry or cultural tourism,” he said.
Strong rule of law
For Bali to compete on the global stage, analysts say Indonesia first needs to establish a rigorous rule of law and an independent authority to provide stability for investors in the financial sector.
“The IFC is not a short cut to expanding non-state budget financing sources. It is more accurately viewed as an institutional instrument that is only effective if the foundations of regulation, governance, oversight and legal certainty are strong,” Achmad Nur Hidayat, a public policy expert at the Veteran National Development University in Jakarta, told This Week in Asia.
According to Achmad, capital flows into the financial sector do not necessarily translate into real growth.
“Large funds may simply circulate in short-term instruments, purchase financial assets, or park funds without creating jobs and productivity,” Achmad said.
“The [government] must ensure that incoming funds are connected to productive sectors such as renewable energy, manufacturing, infrastructure, the digital economy, health, education and national strategic projects. Otherwise, it will become mere liquidity pools, not engines of growth.”
Ariyo Irhamna, an economist with the Institute of Development Economics and Finance, said Indonesia still lagged significantly behind neighbours like Singapore when it came to the rule of law.
“The number one thing people in the financial sector look for is the rule of law and legal certainty,” Ariyo argued. “If the rule of law isn’t enforced, it will be very difficult for Jakarta, let alone Bali, to compete with Singapore.”
Ariyo suggested that the government’s statement offering investors a zero per cent tax rate in the IFC was “outdated” and contradicted the Organisation for Economic Cooperation and Development’s global minimum tax of 15 per cent of all profits, in all countries, for large multinational businesses.
“We actually have a large market of 280 million people. This should be our bargaining power for foreign investors, instead of joining the race to the bottom of the tax rate,” Ariyo said.
Achmad urged that anti-money-laundering and terrorism financing laws be upheld in an IFC, especially those designed to attract family offices and ultra-wealthy individuals.
“The biggest risk faced by IFCs is the possibility of becoming a space for tax arbitrage, money laundering, and concealment of beneficial ownership,” Achmad said.
He suggested mandatory mitigation measures such as implementing Know Your Customer and enhanced due diligence for politically exposed persons.
Automatic data exchange between institutions such as the Financial Transaction Reports and Analysis Centre, the Financial Services Authority, Bank Indonesia, tax and SEZ authorities should also be encouraged, he said.
Ariyo also pointed to hurdles such as the lack of a concrete blueprint, a clear target market, and the island’s infrastructure readiness to support a financial hub.
“Bali’s brand as a world-class tourism destination is already very strong, attempting to pivot towards finance could potentially downgrade the government’s credibility in the eyes of global financial actors [if the transition is handled poorly],” Ariyo said.