JAKARTA: The government has set its sights on turning Bali into a global financial hub as it seeks to move forward with the family office plan thought up by the previous presidential administration, but there are doubts as to whether the resort island is cut out for such a role.
National Economic Council spokesperson Jodi Mahardi told The Jakarta Post that risk assessments for the initiative were underway with regard to regulatory and governance aspects as well as economic implications.
“Discussions are ongoing between the council and relevant institutions to ensure the initiative is carefully and responsibly designed,” he said.
The plan to make Bali a financial hub that could rival Singapore and Hong Kong originated from a proposal made last year by Luhut Pandjaitan, who served as coordinating maritime affairs and investment minister at the time and now helms the council.
The initiative, which initially focused on the idea of attracting business leaders to set up family offices, sparked debate among officials, with Finance Minister Purbaya Yudhi Sadewa ruling out state budget funding.
Luhut responded by saying the family office plan would not rely on the state budget, as it is designed to attract both domestic and foreign investors to place their funds in the country under a zero-tax scheme in the initial phase.
“However, we must create certainty. The investors ask for a common law, so we’re conducting the study, we’ve rarely done proper studies for a project. We tend to go straight into execution,” Luhut said yesterday.
He added that the family office plan gained support from Bridgewater Associates founder Ray Dalio, who underscored the importance of credibility and building trust in running the project.
According to Bloomberg, President Prabowo Subianto has endorsed the plan, with officials currently drafting a proposal and eyeing House of Representatives approval by year-end although the idea remains in the conceptual phase and is subject to change.
The project envisions Bali as a financial hub similar to India’s Gujarat International Finance Tec-City or the International Financial Centre in Dubai, the United Arab Emirates, Bloomberg reported.
The business zone would offer tax breaks and regulatory exemptions to streamline bureaucracy, a persistent challenge for foreign businesses looking to invest in Indonesia. The goal is to attract international banks, asset managers and private equity firms.
