Indonesia Fast-Tracks Bali Financial Hub Bill With 0% Tax Incentives to Challenge Singapore and Dubai

JAKARTA, Investortrust.id — Indonesia moved a step closer to launching an international financial center in Bali after parliament approved deliberations on a dedicated bill, accelerating President Prabowo Subianto's plan to position Southeast Asia's largest economy as a regional wealth management and investment hub.

The House of Representatives on Thursday agreed to discuss the Indonesia International Financial Center (PFII) bill outside its regular legislative agenda, allowing lawmakers to fast-track legislation that must be completed by September under a mandate in the revised Financial Sector Development and Strengthening Law (P2SK).

Indonesia is attempting one of its boldest financial reforms in decades by creating a special financial zone designed to compete directly with established global hubs including Singapore, Dubai and Hong Kong.

The proposed center, expected to be located in Bali, would target global family offices, asset managers, multinational financial institutions and fintech companies through a package of aggressive tax incentives and a more internationally familiar legal framework.

For investors, the initiative signals Jakarta's determination to diversify the economy beyond commodities and manufacturing while attracting long-term foreign capital amid declining foreign ownership of Indonesian financial assets.

A New Financial Hub With Global Ambitions

House Speaker Puan Maharani formally sought parliamentary approval during Thursday's plenary session, with lawmakers unanimously endorsing the proposal.

Following the vote, parliamentary committees will begin detailed discussions with the government, including the Finance Ministry, the Law Ministry, the State Secretariat, and the Investment and Downstream Ministry.

Deputy Chairman of the House Legislative Body, Martin Manurung, said the legislation fulfills Article 248A of the revised Law No. 4/2026 on Financial Sector Development and Strengthening (P2SK), which requires the government to establish the new financial center through a dedicated law within three months of the amendment's enactment.

"The law mandates that the organization of the Indonesia International Financial Center be regulated through a separate act," Martin told lawmakers during the plenary session.

Tax Incentives Could Reach 0%

While the bill is still under discussion, government officials have outlined one of Southeast Asia's most competitive fiscal incentive packages.

Foreign investors could receive 0% tax treatment on certain global assets parked through the center, provided the funds contribute to strengthening Indonesia's foreign exchange reserves.

Financial companies operating inside the special economic zone may also qualify for corporate income tax holidays of up to 100% for 20 to 25 years, depending on investment size.

The draft framework also includes preferential customs treatment, excise incentives, and other regulatory benefits intended to improve Indonesia's competitiveness against established international financial centers.

Special Legal Framework

One of the proposal's most closely watched features is a plan to introduce a special legal regime incorporating elements of common law, a system widely used in major global financial centers.

Officials believe a more internationally recognized legal framework would improve investor confidence, particularly among multinational financial institutions and global wealth managers accustomed to common-law jurisdictions.

The government is also finalizing regulations covering customs, taxation, licensing and dispute resolution as part of the PFII bill.

Beyond Family Offices

Although the initiative initially gained attention as Indonesia's long-awaited framework for attracting family offices, lawmakers say the center's ambitions extend much further.

According to Martin, the PFII is intended to strengthen Indonesia's competitiveness as an international financial center, deepen domestic financial markets, encourage financial innovation, attract domestic and foreign financial institutions, facilitate financing for infrastructure, climate projects and strategic national industries, and expand the financial sector's contribution to long-term economic growth.

The legislation is expected to become the legal foundation for one of President Prabowo's flagship investment initiatives as Indonesia seeks to transform itself into a larger regional financial gateway over the coming decade.