Indonesia International Financial Center: Bridging Common and Civil Law Approaches
- Glenn Wijaya
- 3 days ago
- 7 min read
During my legal education and professional career, I have had the opportunity to study and work across multiple legal traditions. From legal studies in the Netherlands and Poland, a short stint at the Extraordinary Chambers in the Courts of Cambodia (ECCC) in Phnom Penh, to practicing law in Indonesia, pursuing a Juris Master degree in Chinese Law at Tsinghua University, and participating in international arbitration and cross-border commercial matters, I have come to appreciate that investors seek not only economic opportunity, but also legal familiarity. The question is not whether civil law or common law is superior. Rather, it is how different legal traditions can interact effectively in an increasingly interconnected global economy.
Following the enactment of the Law on the Pusat Finansial Internasional Indonesia (PFII) on 21 July 2026, Indonesia has taken a significant step toward establishing its own international financial centre. More importantly, the initiative raises a broader question: can Indonesia position itself as a bridge between civil law and common law traditions in the Indo-Pacific? I believe the answer is yes. The PFII represents an opportunity not merely to build another financial centre, but to create a platform through which Indonesia can connect different legal, commercial, and investment cultures.
Most ASEAN member states, including Indonesia, Vietnam, Thailand, Cambodia, and Laos, are predominantly civil law jurisdictions. Their legal systems are largely influenced by continental European traditions and rely primarily on legislation rather than judicial precedent. Unlike many Commonwealth jurisdictions, these countries generally retain their own national languages as the principal language of legislation, court proceedings, and regulatory administration. This reflects and preserves their legal identity and sovereignty. Yet from the perspective of international investors, legal familiarity often matters as much as economic opportunity.
However, the challenge facing ASEAN today is no longer simply a matter of language. Over the past two decades, the region's legal profession has become increasingly internationalized. In Indonesia, many lawyers routinely advise on transactions governed by English law, Singapore law, or New York law. International arbitration, cross-border financing, mergers and acquisitions, and capital market transactions are frequently documented, negotiated, and concluded in English. A growing number of Indonesian legal professionals have pursued postgraduate legal education abroad, while others hold professional qualifications in common law jurisdictions. In many respects, Indonesia's legal profession has already adapted to the realities of global commerce.
This trend is also reflected in legal education. Similar to developments elsewhere in ASEAN, including Thailand and Cambodia, many Indonesian law schools now offer English-medium or international-track law programs. Students are increasingly exposed to comparative law, international commercial law, international arbitration, and cross-border legal practice from the beginning of their legal education. Participation in international moot courts, negotiation competitions, and academic exchanges has likewise become commonplace. Consequently, legal English and familiarity with common law concepts are no longer viewed as unusual within Indonesia's leading legal and business circles. The next generation of Indonesian lawyers is already being equipped to operate in a global marketplace.
Yet human capital alone is not sufficient. Foreign investors ultimately invest not into lawyers, but into legal systems. While businesses and legal practitioners may transact comfortably in English, the authoritative legal framework—including legislation, judicial procedures, and many official processes—continues to operate primarily in Bahasa Indonesia. Such arrangements are entirely natural for a sovereign civil law state. However, international investors often seek an institutional environment where legal documentation, dispute resolution mechanisms, judicial processes, and commercial concepts are structured in a manner familiar to global financial markets. The issue is therefore not legal competence, but legal accessibility and legal certainty.
This is where the PFII represents a transformative opportunity. Rather than replacing Indonesia's legal system, the PFII seeks to complement it through the creation of a specialized international financial jurisdiction operating within the framework of Indonesian sovereignty. The newly enacted PFII Law expressly provides that English may be used as the official language for regulations, contracts, court proceedings, judgments, and official documents within the PFII. The law further permits the adoption, incorporation, application, and adaptation of common law, equity, international commercial law principles, and international financial-centre best practices while remaining subject to Indonesian sovereignty and Indonesian law.
The PFII Law contains several innovations that are highly familiar to international investors. Among them are trusts, trustees, special purpose vehicles, and family offices—structures commonly used in major financial centres around the world but historically less developed within many civil law jurisdictions. The PFII Law also contemplates a sophisticated ecosystem encompassing banking, insurance, capital markets, derivatives, fintech, venture capital, commodities trading, pension funds, and wealth management services. Through these innovations, Indonesia would not be importing foreign concepts for their own sake. Rather, it would be creating a bridge between global financial practice and Indonesia's legal framework.
Perhaps the most groundbreaking feature of the PFII is its dispute resolution framework. The PFII Law establishes a specialized PFII Court with jurisdiction over disputes arising from activities conducted within the PFII. It also provides for the establishment of a dedicated arbitration institution capable of administering arbitration, mediation, conciliation, expert determination, and other forms of alternative dispute resolution. Significantly, the PFII Court may include both Indonesian and foreign ad hoc judges with expertise in international commercial and financial disputes. These features bear similarities to successful international financial centers such as the Dubai International Financial Centre (DIFC) and reflect Indonesia's ambition to compete for global capital through internationally recognizable legal infrastructure.
The experience of leading international financial centers demonstrates that legal infrastructure is often as important as tax incentives or market size. Investors seek predictable dispute resolution, efficient procedures, judicial expertise, and legal certainty. This is particularly true in cross-border transactions where parties originate from different legal traditions and business cultures. By introducing English-language proceedings, internationally familiar commercial structures, a specialized court, and a dedicated arbitration institution, the PFII has the potential to become a bridge between Indonesia's civil law tradition and the expectations of global financial markets. It is not a case of abandoning civil law in favour of common law. Rather, it is an exercise in legal interoperability.
Although the PFII Law does not designate a specific location for the PFII, Bali would be a particularly compelling candidate. The rationale extends beyond Bali's reputation as a world-renowned tourism destination. Geographically, Bali occupies a strategic position within the Indo-Pacific region. It offers convenient access to major ASEAN capitals, proximity to Australia's principal commercial centres, and operates in the same time zone as Singapore, Hong Kong, and much of Greater China. From a financial services perspective, these characteristics would facilitate seamless interaction with some of the region's most important financial hubs. Moreover, Bali's strong international brand could help accelerate global recognition of the PFII. At the same time, the PFII Law’s flexibility allows Indonesia to develop more than one PFII should future economic conditions warrant additional international financial centres.
The strategic significance of the PFII extends beyond ASEAN. It may also deepen engagement between Indonesia and major common law jurisdictions, particularly India. Earlier this year, as an Inter-Pacific Bar Association (IPBA) Scholar at the IPBA Annual Meeting and Conference in New Delhi, I had the opportunity to engage with legal practitioners from across the Asia-Pacific region. The same year, as an ASEAN Delegate at the Fourth Foreign Policy Talks India-ASEAN Youth Conference 2026, I observed similar enthusiasm among policymakers, academics, and young professionals for deeper economic cooperation between India and Southeast Asia. These experiences reinforced a simple observation: while economic complementarities between Indonesia and India are significant, legal familiarity continues to play an important role in shaping investment decisions.
Historically, jurisdictions such as Singapore and Malaysia have often been viewed as natural destinations for Indian investors because of their common law heritage. The PFII could help narrow this gap. By providing English-language legal infrastructure, internationally recognized dispute resolution mechanisms, familiar commercial structures such as trusts and family offices, and a legal framework inspired by global best practices, Indonesia could become a more accessible destination for Indian investors, technology companies, financial institutions, and wealth managers. At the same time, Indonesia would retain its identity as a civil law jurisdiction. Rather than allowing differences in legal traditions to become barriers, the PFII would transform them into opportunities for collaboration.
Importantly, the significance of the PFII should not be measured solely by the enactment of the legislation itself. The passage of the PFII Law is a major milestone, but its broader importance lies in what it represents: Indonesia's willingness to innovate institutionally and compete not only through market size and natural resources, but also through legal infrastructure, regulatory sophistication, and international connectivity.
The enactment of the PFII Law marks a historic development in Indonesia's legal and financial landscape. More than a financial-sector reform, it is an ambitious effort to position Indonesia as a bridge between different legal traditions, markets, and regions. Indonesia already possesses the lawyers, professionals, and commercial sophistication necessary to participate in the global economy. The PFII now provides an institutional framework capable of matching those capabilities through English-language proceedings, internationally familiar legal concepts, specialised dispute-resolution mechanisms, and a commitment to internationally recognised standards.
As someone who has studied, worked, and interacted with lawyers and policymakers across different legal traditions, I believe legal diversity should not be viewed as an obstacle to cooperation. Instead, it can become a source of strength. If implemented successfully, the PFII could become a model for how civil law and common law traditions can coexist, complement one another, and together drive innovation, investment, and prosperity across ASEAN, India, and the wider Indo-Pacific region. The legal systems of our countries need not be barriers. Properly designed, they can become bridges. Through the PFII, Indonesia has an opportunity to build one.
The article written by Glenn Wijaya, a senior associate at Christian Teo & Partners. He holds a Juris Master in Chinese Law from Tsinghua University, a Sarjana Hukum from Universitas Pelita Harapan and a Bachelor of Laws in International and European Law from University of Groningen. The views expressed herein are his own.