Proposal to Include a Monetary Settlement System in the PFII Draft Bill

Professional associations have proposed that the House of Representatives (“DPR”) incorporate provisions on the establishment of a monetary settlement system into the Draft Bill on the Indonesia International Financial Center (Pusat Finansial Internasional Indonesia – “PFII”). According to the associations, such a system is essential to ensure that financial activities conducted within the PFII generate greater economic benefits for Indonesia.

"If we do not establish our own monetary settlement system within the PFII, Indonesia will lose the opportunity to capture revenues from settlement fees, custody fees, and clearing services, which would instead accrue to banks in Singapore or Hong Kong," said Edwin Ridwan, Chairman of the Chartered Financial Analyst (“CFA”) Society Indonesia.

Edwin explained that the proposal is driven by the expectation that global investors will conduct transactions in foreign currencies (hard currencies) within the PFII ecosystem, as contemplated under the Draft Bill. Without a domestic transaction settlement system, Indonesia risks serving merely as a jurisdiction for company registration while failing to capture the value-added generated by the accompanying financial services.

According to the PFII Draft Bill obtained by Hukumonline, Article 49 paragraph (2) provides that business activities within the PFII may be conducted using foreign currencies. An exception applies to supporting operational transactions and day-to-day activities, which must continue to be conducted in Indonesian Rupiah.