The Indonesian government has announced plans to create an international financial center (IFC)on the island of Serang, which is part of Bali. The center will be located in the Kura-Kura Special Economic Zone (SEZ) and will offer a zero tax on capital coming from abroad. Investments are supposed to be directed to government securities and projects of the Danantara sovereign fund.
The Minister of Finance of Purbaya, Yudhi Sadeva, said that the zone will operate according to the norms of common law modeled after the Dubai International Financial Center (DIFC). According to him, money from other countries will not be taxed.
The planned financial center will occupy about 100 hectares within the larger Kura-Kura SEZ (498 hectares). Initially, in April 2023, this zone was created for the development of tourism and the creative economy. The financial component was added in April 2026 at the initiative of President Prabowo Subianto.
As of the first quarter of 2026, the SEZ has attracted 1.62 trillion rupees (about $92 million) of investments and created more than 2,100 jobs. The Japanese company Mitsubishi Estate is already implementing the project of the luxury shopping center Sira Village in the zone, which is scheduled to open in mid-2026.
Economic situation
Plans to create a financial center have emerged against the backdrop of economic instability in Indonesia.
In January 2026, the international index provider MSCI warned of a possible downgrade of the country's status due to the lack of transparency in the ownership structure of companies. Following this announcement, the Jakarta Composite index fell by 7.4% in one trading session, leading to a 30-minute trading halt. The market value of about $120 billion has evaporated. The head of the stock exchange and the chairman of the financial regulator OJK have resigned.
Goldman Sachs estimated the possible additional capital outflow in the event of a downgrade at another $7.8 billion. The April MSCI review did not worsen the situation, but froze the addition of new Indonesian companies to the indexes. A significant revaluation is expected in June 2026.
In addition, the rupee weakened to about 17,700 per US dollar, which is close to historical lows. The reasons are capital outflow, inflationary risks associated with the conflict in the Middle East, as well as fiscal problems. Indonesia's budget deficit last year amounted to 2.92% of GDP, almost close to the legal limit of 3%.
Will the initiative be successfully implemented?
Philip May, CEO of EC Holdings and a long-time observer of Southeast Asian markets, strongly criticized the plan. "As someone who knows Indonesia, I can guarantee that this will never happen. And if it does, it will be so ineffective that it won't attract anyone," he said.May pointed to a fundamental problem: Indonesia does not have internal border controls between provinces. Participants will be able to register in the zero tax zone in Bali, but it is impossible to verify that they live elsewhere in the archipelago. "Why would other provinces grant Bali such a privilege?"The expert wonders, calling the initiative a 'PR stunt.'
Indonesia already has several programs to attract foreign capital and specialists, but none of them has gained significant scale relative to the size of the country.
- Golden Visa (September 2023):It requires investments of $350,000 in government bonds, bank deposits or shares of public companies to obtain a 5-year residence permit ($700,000 for a 10-year one). The program does not grant the right to permanent residence or citizenship. Since July 2024, more than 1,000 such visas have been issued to investors from 61 countries, with corporate applicants providing the main demand.
- Second Home Visa (late 2022):It grants the right to 10-year residence in exchange for a deposit of about $ 130,000 in the state bank of Indonesia.
- Visa for remote workers E33G (April 2024):It allows digital nomads employed by foreign companies to live in Indonesia for one year. Income from Indonesian sources is prohibited. The required annual income for the applicant is at least $60,000.
It remains unclear whether the new financial center in Bali will offer any additional immigration or investment opportunities, or simply add tax benefits to the existing SEZ infrastructure.
Source: IMI
