Hidayat said his own private funds would help to pay for the running costs of the eight-court Taufik Hidayat Arena, with building due to start in March.
"Rejuvenation of younger players should be the job of the Indonesian Badminton Association," he said. "But local competitions will help identify new talent. I want to use the arena to hold local competitions."
"It is 6600 metres squared and each metre squared costs 1.5 million rupiah ($161), so you could just imagine the cost."
With the majority of badminton tournaments not being broadcast on free-to-air television in Indonesia, finding sponsorship has been difficult for local players which is why Hidayat has felt the need to step in and help.
"The Indonesian brands aren't interested in sports people, only movie stars, because they can get more exposure in the media," he said.
Hidayat, who has no immediate plans for retirement, said he does not regret his split with the Indonesian Badminton Association (PBSI).
"As with any association, there will always be rows, and you can find people in PBSI that aren't in tune with my vision. I achieved so many things for PBSI, and I felt burdened by expectations."