Indonesia's Finance Minister Purbaya has proposed creating a tax-free financial center in Bali, explicitly comparing the plan to Dubai's model, in a bid to position the resort island as a regional competitor to Singapore's dominance of Southeast Asian finance.
"I won't tax it," Purbaya said in remarks reported by CNN Indonesia, referring to the proposed financial hub that would offer tax incentives to attract international financial services firms, wealth management companies and trading operations to Bali.
The proposal represents an ambitious attempt to diversify Indonesia's economy beyond its traditional strengths in natural resources and manufacturing, positioning Bali—known globally as a tourism destination—as a serious financial services center. But the plan raises fundamental questions about fiscal sustainability and regional competitive dynamics.
The Dubai comparison is deliberate. The United Arab Emirates transformed itself into a Middle Eastern financial hub by offering zero corporate and income taxes in designated free zones, attracting banks, investment firms and wealthy individuals seeking tax-advantaged jurisdictions. Purbaya appears to envision Bali playing a similar role in Southeast Asia.
However, Indonesia faces a challenge that Dubai did not: Jakarta needs tax revenue. Unlike the oil-rich UAE, which can afford to forgo tax income, Indonesia is a developing economy with massive infrastructure needs and limited fiscal space. Creating tax-free zones means revenue foregone—revenue that could fund roads, schools and healthcare across the archipelago.
