The legal framework for the development of an internationally competitive financial centre (“PFII”) aimed at facilitating cross-border investment and international financial activities has now been published (Law on the Indonesia International Financial Centre - Undang-Undang Pusat Finansial Internasional Indonesia – of 21 July 2026). The law is now undergoing the formal promulgation process for publication in the state gazette, to be effective and implementable.
The PFII is intended to complement Indonesia’s existing financial system and attract international investors, financial institutions, multinational groups, family offices, wealth managers and other global participants. Bali has been identified as a potential location for the PFII, although the final location and operational arrangements remain subject to further implementing regulations.
The framework encompasses a broad range of activities, including banking and investment banking, capital markets, asset and wealth management, insurance and reinsurance, family offices, financial technology, treasury activities, commodity and derivatives trading, venture capital, investment activities and trust services.
A key feature of the PFII framework is the availability of a special tax regime. Qualifying taxpayers and activities may be eligible for corporate income tax facilities of up to 100% for a period of up to 50 years. The framework also contemplates other potential facilities, including income tax incentives for qualifying investors, entities and foreign professionals; VAT and luxury goods tax facilities; customs and import duty facilities; and specific tax treatment for certain investment and family office activities.
For multinational groups within the scope of the OECD Pillar Two rules, however, the potential benefits of reduced Indonesian taxation would need to be assessed together with the Global Minimum Tax framework. A reduced effective tax rate in Indonesia could potentially give rise to additional top-up tax.
In addition to the tax framework, UU PFII provides for dedicated institutions and governance arrangements, including a Board and Oversight Body, a Financial Services Authority, a dedicated PFII Court and a PFII Arbitration Institution. The effectiveness, independence and consistency of these institutions will be important in establishing the level of legal and regulatory certainty expected by international investors.
The framework also contemplates immigration facilities, including golden visa arrangements for eligible investors, ultra-high-net-worth individuals and international professionals, as well as the use of foreign currencies for certain financial instruments and transactions conducted within the PFII.
From a business perspective, the PFII may create opportunities for multinational groups to consider locating regional holding, treasury, financing, investment, family office and wealth management functions in Indonesia. Groups currently operating such functions through established financial centres such as Singapore, Hong Kong or Dubai may therefore wish to monitor the development of the PFII framework.
Conclusion
The PFII represents Indonesia’s initiative to develop an international financial centre capable of competing with established regional and global financial hubs. However, as of the publication of this article, the law is undergoing the formal promulgation process for publication in the state gazette. Accordingly, key aspects of the regime—including eligibility requirements, the detailed scope and mechanics of the tax incentives, governance arrangements, immigration facilities and other operational requirements—remain to be clarified once the law is published in the state gazette and the relevant implementing regulations are issued.
The attractiveness of the PFII will ultimately depend not only on the incentives available, but also on legal certainty, regulatory stability, infrastructure, access to talent and institutional credibility. If effectively implemented, the PFII could provide an additional platform for international and regional financial activities and strengthen Indonesia’s position as an emerging financial hub in Asia.
