Legal Expert: PFII Law Legitimation to Have Significant Positive Impact on Nation

RRI.CO.ID, Jakarta - The Indonesian House of Representatives (DPR RI) officially ratified the Indonesian International Financial Center Law (PFII Law) on July 21, 2026. The law on the PFII was drafted as the legal foundation for establishing an international financial center in Indonesia, as mandated by the Law on the Development and Strengthening of the Financial Sector (P2SK Law).

The introduction of this regulation is expected to provide a foundation for Indonesia to strengthen the competitiveness of its financial services sector while attracting more international investment and financial activities into the country. The establishment of the PFII is considered a strategic step toward fostering Indonesia’s position on the global financial map.

President Prabowo Subianto in his State Address at the Annual Session of the People’s Consultative Assembly (MPR RI) and the Joint Session of the MPR, DPR, and DPD RI at the Nusantara Building, Senayan, Jakarta, Friday, August 14, 2026, affirmed that the Indonesia Financial Center, which will have offices in Jakarta and Bali, is expected to become a hub for finance, investment, financial technology, arbitration, and commercial dispute resolution, thereby significantly boosting economic growth.

Although the legitimation of the law proceeded smoothly, it obtains a wave of critical observations from legal and economic experts. The main concerns focus on the potential risks of money laundering and the possibility of the PFII developing into a tax-haven jurisdiction.

Meanwhile, the proposal to establish a special PFII court has raised concerns about the potential emergence of a dual judicial system. Public attention has also focused sharply on the possibility of overlapping authority between the PFII Management Agency, the Financial Services Authority (OJK), and Bank Indonesia.

Professor and Senior Academician at Sultan Agung Islamic University in Semarang, Prof. Dr. Henry Indraguna, S.H.,M.H. considered these public concerns to be a very reasonable form of social oversight. According to him, every major financial regulation inevitably carries complex legal implications because of its potential impact on the broader economy and society.

“Public criticism is an important alarm to ensure that the government does not act carelessly or recklessly, potentially creating adverse consequences, including losses to the state,” Prof. Henry told the media in Jakarta on Sunday, August 16, 2026, following his response to the President’s State of the Nation Address at the recent Annual Session of the MPR.

Prof. Henry warned that potential loopholes for money laundering must be firmly closed through precise implementing regulations, while avoiding a narrow sectoral-ego approach among the relevant institutions and sectors. Nevertheless, the Legal expert remains optimistic about the ratification of the law. Prof. Henry dismissed concerns that the establishment of a special court within the PFII would undermine national legal sovereignty.

“A special court would instead provide the legal certainty sought by foreign investors without sacrificing the principles of national procedural law,” he conveyed. He believes that the PFII Law represents a bold legal breakthrough. “The government simply needs to establish a transparent and stringent mechanism for monitoring beneficial ownership,” the DPR RI Expert Adviser conveyed.

Henry is optimistic that the passage of the PFII Law will have a significant positive impact on the national economy. The policy is expected to deepen the domestic financial market and accelerate the inflow of foreign capital and liquidity.

“Indonesia will no longer merely be a spectator to global capital flows,” Prof. Henry said. He also referred to the views of economist Prof. Raghuram Rajan of the University of Chicago Booth School of Business, who argued that legal certainty and regulatory efficiency are essential conditions for channelling global capital into emerging markets.

In addition, the Deputy Chairperson of the Board of Trustees of the Indonesian Advocates Congress (KAI) believes that the PFII Law can create an ecosystem capable of generating thousands of highly skilled jobs in the financial services sector. “The key now lies in consistent enforcement of the law and accountability in its implementation on the ground,” he said.