The rushed push to turn Bali into an international financial hub risks turning the island into a speculative tax haven unless policymakers fix critical legal loopholes and money-laundering blind spots.

Luhut Pandjaitan wants investors to imagine kamikaze drones over Abu Dhabi, then picture themselves in Bali instead.

BALI, July 25 — Indonesia is moving to turn its famed resort island of Bali into an international financial centre, with senior adviser Luhut Pandjaitan pitching it as a safe...