Jakarta, Not KL, Is Building The Post-G7 Financial Hub

In February 2025, Indonesia launched Danantara, a sovereign wealth fund consolidating roughly 1,000 state-owned enterprises and headed for $1 trillion in assets under management. Within twelve months, the fund had signed an ASEAN-China investment platform with China Investment Corporation, a $4 billion joint vehicle with the Qatar Investment Authority, a €2 billion fund with Russia’s Direct Investment Fund, and a renewables memorandum with Saudi Arabia’s ACWA Power. It then named Ray Dalio, Jeffrey Sachs, and former Thai Prime Minister Thaksin Shinawatra as advisors. Prabowo’s team did all of this in a single year.

That is what a country looks like when it has decided to compete for capital rotating out of the West.

It is not what Malaysia looks like. I write that with no satisfaction.

For two decades, Malaysia has argued, correctly in my view, that the post-1945 financial order is fracturing. Sukuk markets, BRICS settlement systems, Gulf sovereign wealth, OIC capital, Chinese infrastructure finance, Indian outbound investment: a parallel financial system is forming, and somebody in Southeast Asia is going to host it. The Dubai 2.0 thesis is real, and on paper Malaysia holds the strongest hand in ASEAN to play it. The world’s largest Islamic finance market by assets, at $2.25 trillion. Roughly 39 per cent of global sukuk issuance. The Strait of Malacca. A Muslim-majority population, English fluency, a respected legal system, and a regulator in Bank Negara that is taken seriously from the Gulf to London.

The hand has been there for a generation. The play has not. I have made some version of that argument in private rooms across international convenings for the better part of a decade. It has been received politely. It has not been acted on.

Indonesia, holding a weaker hand on Islamic finance specifically, has decided to make the play anyway. On 6 January 2025, it became the first ASEAN nation to join BRICS as a full member, and committed $1 billion over seven years to the BRICS New Development Bank. The head of Indonesia’s Nusantara Capital City Authority then publicly declared that Jakarta will become a “financial superhub” once the capital relocates to Nusantara, explicitly modelled on what Almaty became after Kazakhstan moved its capital to Astana. Indonesia and Kazakhstan signed a Nusantara-Astana sister-city agreement to make the comparison official. They are not pretending.

The contrast with Malaysia’s institutional balance sheet is uncomfortable to set down on paper. Khazanah Nasional, Malaysia’s closest equivalent to Danantara, held a realisable asset value of about RM156 billion at the end of 2025, roughly $33 billion. That is one-thirtieth of Danantara at full ramp. There is no Malaysian Islamic-finance equivalent of the QIA-Danantara $4 billion fund. There is no Malaysian-led ASEAN-China investment platform. Labuan IBFC remains, more than thirty years after its founding, a competent offshore jurisdiction with a sound regulator and modest scale. It has never been given a Dubai-scale political mandate. Kuala Lumpur has never been publicly positioned as the destination for capital rotating out of the West.

This is not a policy lag. It is a strategic gap.

It is also not a gap the current Malaysian leadership can claim to be unaware of. Prime Minister Anwar Ibrahim has been the most rhetorically pro-BRICS leader in ASEAN. At the BRICS summit in Rio in July 2025, he called for the transformation of the IMF, World Bank, and WTO toward a more democratic order. He has praised President Xi Jinping as an outstanding leader. He has spoken often about the inadequacy of dollar dominance and the right of developing countries to shape their own financial architecture.

I have admired most of those speeches. They are not the issue.

The issue is that while Anwar gave the speeches, Indonesia built the institutions. Malaysia accepted “partner country” status in BRICS in January 2025, declining full membership because, in the foreign minister’s words, the country did not want to complicate the current situation. Indonesia took the seat. Malaysia debated whether deeper BRICS engagement might offend Washington and trigger a 100 per cent tariff threat. Indonesia signed the New Development Bank commitment.

A Malaysian observer can be sympathetic to the caution. Anwar leads a country whose semiconductor exports to the United States are a structural pillar of the economy, and which absorbed a 19 per cent US tariff that took effect on 8 August 2025. The geopolitical room is narrow, and I will not pretend it is not. But that is precisely what makes the absence of a Danantara-equivalent vehicle, an explicit financial-hub mandate for Labuan or Kuala Lumpur, and a named partner architecture with Gulf and Chinese sovereign capital so striking. None of those moves require BRICS full membership. None of them require offending Washington. They require political will and an industrial-scale capital strategy that Putrajaya has not yet been willing to authorise. Indonesia, holding a worse hand with the West, has authorised them anyway.

The Dubai 2.0 window does not stay open forever. By 2028, the institutional choices being made today will have hardened into a regional architecture that newcomers cannot easily disrupt. The Chinese, Gulf, and BRICS+ partnerships being signed in this window will define the financial hinge of post-G7 Southeast Asia for a generation. Indonesia is doing the signing.

That is the diagnosis. There is no comfort in delivering it about my own country, but I am not in the business of comfort.