Jakarta. Indonesia is finalizing a financial special economic zone (SEZ) to capture global capital flows, as geopolitical tensions in the Middle East push investors to seek safer destinations.

Chief of Economic Affairs Minister Airlangga Hartarto said the initiative aims to position Indonesia as a credible international financial hub, rather than losing out to regional peers like Singapore and Hong Kong, as well as financial centers in the United Arab Emirates.

“With uncertainty in the Middle East, opportunities are opening up for other countries. If we are not prepared, our neighbors will be the ones benefiting,” Airlangga said at an Investor Daily Roundtable in Jakarta on Tuesday. “Indonesia is preparing alternatives for investment through family offices and financial centers. We are currently detailing the requirements.”

The government is reviewing key instruments required by global investors, including trustee systems, legal entities such as foundations, and dispute settlement mechanisms aligned with international common law standards.

“All of these are being prepared, and we are also monitoring potential locations,” he added.

The push builds on earlier efforts led by National Economic Council (DEN) Chairman Luhut Binsar Pandjaitan, who in 2024 proposed establishing family offices in Bali to attract foreign capital into Indonesia’s real sector without relying on the state budget. The scheme offers initial tax incentives, with funds entering tax-free while profits are taxed later.

Family offices, private firms managing assets typically exceeding $50–100 million, are central to Indonesia’s ambition to compete with established hubs. The initiative is part of a broader strategy to rival financial centers in Singapore, Hong Kong, Abu Dhabi, and Dubai.

Luhut has held discussions with Ray Dalio, founder of Bridgewater Associates, as well as members of the Porsche family, both of whom expressed interest in setting up family offices in Indonesia.

Former tourism minister Sandiaga Uno previously estimated that Indonesia could attract up to $500 billion in managed funds if the concept succeeds.

Beyond finance, the SEZ strategy also targets data center development, capitalizing on rising demand driven by artificial intelligence and Singapore’s temporary moratorium on new facilities. Indonesia has already moved to seize this opportunity through Batam, where global players such as Equinix and GDS have invested.

“I see that data center development is closely linked to a large population. This sector is among the most attractive for investors at the BKPM,” Airlangga said.

Indonesia also holds a scale advantage. While Singapore targets around 200 megawatts of capacity, a single operator in the Bekasi–Karawang corridor can develop up to 300 megawatts. The country’s edge is further supported by submarine fiber optic infrastructure, with landing points in Batam connected to East Asia and Bitung linked directly to the United States via Guam.

“In these two locations, demand for data centers will continue to grow. Nearly every country requires domestic data centers for faster and more secure processing, so we are not concerned,” Airlangga said.