Jakarta. On July 20, the national legislature passed legislation establishing the Indonesia International Financial Center, a project intended to attract global capital, deepen domestic financial markets and develop new expertise. Dubai International Financial Centre (DIFC) is the obvious reference point, with its tax incentives, special regulatory framework and dedicated dispute-resolution mechanisms.
Dubai is therefore both a policy model and a practical destination for Indonesian entrepreneurs. But it should be viewed with clear eyes. The city offers access, speed and scale, but also high operating costs, intense competition and exposure to regional instability.
The conflict involving Iran has underscored that trade-off. Businesses do not have to operate inside a conflict zone to feel the consequences. Airspace closures, shipping delays, higher insurance premiums and shifting travel patterns can quickly raise costs. For companies that depend on imported goods, regional distribution or frequent travel, such disruptions can hit cash flow almost immediately.
Dubai has so far kept its commercial system functioning. Airports, ports, banks and business services have continued to operate, while authorities have sought to reassure residents and investors. That continuity matters because businesses retain staff and capital when they believe essential services will remain reliable and governments can respond quickly to disruptions.
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Still, Dubai’s reliance on transport, logistics, tourism and finance leaves it vulnerable if regional tensions become prolonged. Higher freight costs, delayed deliveries, weaker consumer demand and tighter labor-market conditions would inevitably affect businesses operating there.
This is particularly important for Indonesian small and medium-sized enterprises. Large corporations can reroute supply chains, diversify across markets and absorb temporary losses. Smaller firms usually cannot. A delayed shipment can damage a distributor relationship. A sudden increase in warehousing or rental costs can erase already-thin margins. A decline in tourism spending can quickly hurt businesses in food, retail and hospitality.
Even so, Dubai remains difficult to ignore. Its strategic location connects the Gulf with Africa, South Asia and Europe. An Indonesian company can use a single base to reach multiple markets without establishing operations in each country. Its international population also creates demand for processed food, modest fashion, hospitality supplies, digital services and halal-certified products.
For Indonesian businesses, Dubai can serve as a testing ground rather than merely a final destination. A product that succeeds there may also find customers in Abu Dhabi, Riyadh, Doha and elsewhere in the Gulf. The city’s ports, airports and logistics networks lower the cost of testing multiple markets from a single location.
The opportunity is already evident. The Indonesia-UAE Comprehensive Economic Partnership Agreement entered into force in September 2023, improving market access and trade facilitation. In November 2024, Juara Roti Indonesia, a small bakery from Klaten, Central Java, exported another shipment of bread dough to the UAE. The transaction was modest compared with major energy or infrastructure projects — which is precisely why it mattered.
It demonstrated that the market is not reserved for state-owned enterprises or large conglomerates. Smaller Indonesian producers can compete if they meet certification, packaging, logistics and distribution requirements. Preferential tariffs create opportunities, but they cannot compensate for weak branding, unreliable partners or insufficient working capital. Market access and market success are not the same thing.
Dubai’s Indonesian community can provide early customers, business contacts and practical knowledge. But no company can rely on diaspora demand alone. Long-term growth requires competing with firms from India, China, Turkey, Europe and across the Arab world — many of which possess stronger brands and deeper distribution networks.
The cost structure is another reality check. Registering a company may be relatively straightforward, but operating profitably is considerably more difficult. Visas, banking, office space, regulatory compliance, professional services, employee housing and health insurance all add to the bill. The absence of personal income tax does not make Dubai an inexpensive place to do business.
This is where DIFC offers lessons beyond tax incentives or prestige. Its strength lies in predictable regulations, an independent regulator, dedicated courts and enforceable contracts. During periods of uncertainty, those institutional advantages become even more valuable.
Indonesia’s new financial center is intended to provide some of the same foundations. The law allows fiscal and non-fiscal incentives, foreign-currency transactions, simplified licensing and immigration procedures, and dedicated arbitration and judicial mechanisms. The government hopes the center will attract investment, diversify financing sources and develop expertise in Islamic finance, sustainable investment, fintech and digital finance.
The ambition is significant, but the hard work has only begun. Investor requirements, eligible sectors, tax incentives, operating procedures and even the final location still depend on implementing regulations. Indonesia therefore faces a fundamental test: can it build confidence in the rules, or will it merely create another special economic zone?
Dubai’s success was never built on iconic architecture alone. It was built on administrative efficiency, policy consistency, global connectivity and confidence that disputes would be resolved fairly and predictably. Indonesia can replicate the physical form relatively quickly. Replicating that credibility will take considerably longer.
The new financial center also needs a clear economic purpose. It could help Indonesian companies raise capital, attract global asset managers and deepen domestic financial markets. Equally, it could become a privileged enclave with only weak links to local businesses, universities and workers. If that happens, incentives would simply relocate activity rather than create new capabilities.
The same principle applies to Indonesian entrepreneurs considering Dubai. The city is a platform, not a promise. Businesses must decide whether the UAE is their destination or their gateway, whether projected margins can absorb high operating costs, and whether their supply chains are resilient enough to withstand regional disruptions.
Dubai remains attractive because it has built institutions that reduce the commercial costs of uncertainty. That is the distinction that matters more than comparisons of skylines or promotional branding. The city’s real lesson is not glamour or low taxes. It is governance. Businesses move faster when rules are predictable, contracts are enforceable, disputes are resolved efficiently and infrastructure remains reliable. Those are the qualities Indonesia should emulate — not Dubai’s image, but the institutions that made that image possible.
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Virdika Rizky Utama is executive director of the PARA Syndicate and a PhD researcher in Political Science at the School of Social Sciences, Nanyang Technological University, Singapore. The views expressed are solely those of the author.
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