Indonesian and Hong Kong officials, as well as investors across the region, converge at the Nusa Dua Forum to discuss the island’s potential

Indonesia is pushing ahead to transform the holiday island of Bali into an international financial centre, with its parliament set to debate new laws this week while a key conference set out targets and cited models such as Hong Kong as an example.

Minister of Investment and Downstream Industry Rosan Roeslani, who heads state-owned sovereign wealth fund Danantara Indonesia, said the financial centre was part of Jakarta’s efforts to establish itself as a trusted destination for investors seeking to grow their money in the long term.

Rosan, alongside other officials, Hong Kong’s Deputy Secretary for Justice Horace Cheung Kwok-kwan, sovereign fund operators, family office leaders and institutional investors were among about 120 participants at the inaugural Nusa Dua Forum in Bali on Friday, organised by the South China Morning Post with Danantara Indonesia as partner.

“We will, like any other financial centre, have an independent court system, independent financial authority system, and also independent corporations,” Rosan said in his opening speech. “We strongly believe we will do this properly with the highest standard.”

Panellists at the summit weighed in on the collaboration between “patient” government capital and multi-generational family offices. Examples cited include the Hong Kong government-owned Hong Kong Investment Corporation; Danantara; Blue Pool Capital, the Hong Kong-based family office of Alibaba co-founder and SCMP chairman Joe Tsai; and Henderson Land Development chairman Peter Lee Ka-kit’s family office. Alibaba owns the SCMP.

SCMP publisher Tammy Tam said the conference was taking place at a pivotal time, adding: “[Indonesia’s] bold agenda of policy reform, industrial upgrading and sovereign-led investment – anchored by Danantara – is opening new corridors of opportunity where investment, family capital and entrepreneurship come together to drive growth at scale.”

Tam noted that Hong Kong served as a financial hub where public and private capital intersected, enabling family offices to set up shop quickly.

“We see that Asia as a whole is not just responding to global shifts in geopolitics and economics – Asia is the future,” she said.

‘Big leap of faith’

In his speech, deputy secretary Cheung stressed that Hong Kong’s strengths lay in the institutional credibility of a common law system with internationally compatible laws and a “predictable and certain” regulatory framework.

He also highlighted that with the Hong Kong International Commercial Court being set up to handle complex, high-value disputes, the city could provide more safeguards to parties engaged in international and cross-border commerce.

“By choosing Hong Kong, you get much more than a vibrant market with a great geographical location. Instead, you will be embracing a set of predictable and internationally compatible standards. You will be enjoying Hong Kong’s unique advantages,” he said.

On Indonesia’s front, Rosan said Bali was gearing up to provide the “best incentives” to investors. Full tax waivers for businesses and foreign finance experts have been discussed in parliament, which is expected to pass a proposal next Tuesday to clear the way for the centre located in the Kura Kura Special Economic Zone on Serangan Island.

In a bid to attract investors, he told the closed-door, by-invitation-only gathering that the hub will also adopt common law – akin to the legislation systems implemented by financial centres in Dubai and Singapore – instead of the civil law framework used nationwide.

Luhut Pandjaitan, chairman of Indonesia’s National Economic Council, said the financial centre would soothe investors’ concerns about transparency. Global indexes and investors have recently raised doubts that Jakarta’s equity market lacks openness, particularly regarding stock manipulation and opaque shareholding structures.

“The international financial centre is one of the answers to bring hope, to bring confidence that Indonesia is different than before,” Luhut said.

Other than opportunities such as renewable energy and technology innovation, Bali’s topography and scenic views gave it an intangible edge, he said.

“You’ll never get bored in Bali. Whenever I land in Bali I can feel friendliness, harmony and hope,” he said. “Please don’t hesitate to do so. Behind the gateway sits a US$1.5 trillion economy.”

During a panel discussion, Tengku Zafrul Aziz, chairman of Malaysian Investment Development Authority, said consistent legislation and incentives for investors will play a “key role” in Bali’s success.

A stable and consistent implementation of the law was crucial in preventing any “systemic risks” caused by inconsistent government attitudes towards the centre, the former trade and investment minister said, warning of such a possibility during the changing of hands.

“We need to be aware of those potential pitfalls and ensure mitigation is done. But in short, Bali definitely has a promise of delivering what Danantara or the Indonesian government wants,” Zafrul said at the event held at a resort in Nusa Dua.

Pandu Sjahrir, Danantara Indonesia’s investment chief, said at the same conference that Bali was transitioning from a tourism destination into a global financial centre, noting similar cases such as Miami becoming an asset management hub in the United States.

Indonesia’s decision to establish its first financial hub was a “big leap of faith” and required experienced individuals to devise and execute its framework, Pandu said.

“We have to be consistent. We need to have stability in terms of the legal system. And in terms of fiscal incentives, we have to be competitive,” he said, noting that a mix of locals and foreigners with a track record in centre operations should lead management.

“That’s super important, especially in the first few years, because that’s when you establish reputation and trust.”