Indonesia’s New International Financial Centre Law: What Foreign Investors Should Watch

Indonesia is taking a significant step toward positioning itself as a regional financial hub.

On 21 July 2026, the House of Representatives approved the law governing the Indonesia International Financial Centre, or PFII. The legislation provides a legal foundation for creating one or more specialised financial jurisdictions designed to attract international capital, global financial institutions, and high-value financial services to Indonesia.

The initiative is intended to complement—not replace—Indonesia’s existing financial system. Its broader objectives include deepening the domestic financial market, expanding access to international capital, financing strategic projects, encouraging financial innovation, and creating highly skilled employment.

For foreign investors, the PFII framework could create significant new opportunities. At the same time, much of its commercial value will depend on how the government translates the law into implementing regulations.

What Is the Indonesia International Financial Centre?

The PFII is intended to operate as a specialised territory or financial ecosystem with certain regulatory, administrative, fiscal, and institutional features tailored to international financial activities.

Its legal mandate originated from Article 248A of Law No. 4 of 2026, which amended Indonesia’s Financial Sector Development and Strengthening Law. The government began formal discussions on the PFII bill on 2 July 2026, and Parliament approved the legislation less than three weeks later.

The government has said that Indonesia needs a financial centre capable of competing with established international hubs by providing:

Modern financial products and services;
Internationally recognised governance standards;
Legal certainty for cross-border transactions;
Efficient capital mobilisation;
Competitive tax and customs facilities;
Specialised licensing and administration; and
Credible commercial dispute resolution.

The Ministry of Finance has also emphasised that the PFII is intended to facilitate financing for priority industries, strategic national projects, sustainable investment, and other high-value economic activities.

Why the New Law Matters to Foreign Investors

The PFII Law could establish a new entry point for global financial businesses that previously served Indonesian clients from Singapore, Hong Kong, Dubai, Labuan, or other international jurisdictions.

Government and parliamentary officials have identified global banks, investment banks, wealth managers, family offices, aircraft leasing companies, ship leasing companies, and related financial institutions as potential participants. The Ministry of Finance has estimated that the initiative could attract approximately Rp300 trillion to Rp500 trillion in investment, although this remains a government projection rather than a guaranteed outcome.

The opportunity is not limited to financial institutions. Professional firms, technology providers, corporate-service providers, and businesses supporting international transactions may also benefit from the ecosystem.

Which Business Activities May Operate in the PFII?

The law covers a broad range of financial and supporting activities. Based on the publicly available description of its provisions, eligible financial activities may include:

Commercial and investment banking;
Insurance and reinsurance;
Sharia financial services;
Capital-market activities;
Financial derivatives;
Carbon trading and exchanges;
Pension funds;
Financing and leasing;
Venture capital;
Financial-technology innovation;
Guarantee services;
International commodity trading;
Bullion-related businesses;
Trust and asset-management services;
Financial-instrument management;
Financial holding companies;
Money-market and foreign-exchange activities; and
Family offices.

Professional supporting services may include accounting, valuation, notarial services, legal services, financial consulting, and other specialised business-support activities.

However, inclusion in one of these categories does not necessarily guarantee admission to the PFII or entitlement to its incentives. Investors will need to examine the final licensing classifications, capital requirements, business-substance rules, ownership conditions, and supervisory requirements.

1. Tax Incentives Could Be Significant—but Are Not Automatic

Tax incentives are among the most closely watched parts of the PFII framework.

Public statements surrounding the law have referred to a potential corporate income tax holiday of up to 50 years for qualifying investors. The framework also provides for facilities involving:

Corporate income tax;
Value-added tax;
Sales tax on luxury goods;
Customs and import duties;
Certain inheritance-related tax treatment;
Initial capital contributions; and
Other special fiscal facilities.

The law also includes reporting requirements, tax-administration obligations, and sanctions for parties that misuse the incentives.

Foreign investors should therefore avoid assuming that every PFII entity will automatically receive a 0% tax rate for 50 years. Eligibility is expected to depend on specific conditions, which may include the nature of the business, foreign capital brought into the PFII, investment value, economic substance, employment, and compliance with future government regulations.

The Global Minimum Tax Still Matters

Large multinational groups must also consider Indonesia’s implementation of the OECD/G20 global minimum tax.

Indonesia applies a minimum effective tax rate of 15% to multinational groups with consolidated global revenue of at least EUR750 million, beginning from the 2025 tax year. When a group’s effective tax rate falls below 15%, a top-up tax may apply.

Consequently, a nominal 0% PFII corporate tax rate may not produce a 0% group-level tax burden for an in-scope multinational enterprise.

Before establishing a PFII entity, international groups should model:

Indonesian corporate income tax;
Domestic minimum top-up tax;
Income Inclusion Rule exposure;
Undertaxed Profits Rule exposure;
Withholding taxes;
Tax-treaty access;
Transfer-pricing arrangements; and
The treatment of refundable or non-refundable incentives.

The commercial value of a PFII incentive may depend as much on its design under global minimum-tax rules as on the headline tax rate.

2. Foreign-Currency Transactions Will Receive Special Treatment

The PFII framework allows special arrangements for the use of foreign currencies in business activities conducted within the financial centre.

This represents an important departure from Indonesia’s general requirement to use the rupiah for domestic transactions, subject to existing statutory exemptions. The PFII provisions could make it easier to structure international financing, investment funds, leasing, insurance, commodity trading, and wealth-management transactions in currencies such as the US dollar.

Nevertheless, investors should wait for detailed rules addressing:

Which transactions may use foreign currency;
Whether prior approval is required;
Permitted accounting and reporting currencies;
Foreign-exchange settlement;
Conversion and repatriation procedures;
Prudential foreign-exchange exposure limits; and
Coordination with Bank Indonesia.

Foreign-currency flexibility will be commercially valuable only when its accounting, tax, banking, and regulatory treatment is aligned.

3. A Dedicated Regulatory Structure Will Be Established

The legislation envisages a separate institutional structure for operating and supervising the PFII.

The framework includes:

A PFII advisory or governing council;
A PFII management authority;
A dedicated financial-services supervisory authority;
Reporting obligations to the President and Parliament; and
Additional institutional rules to be established through presidential regulations.

The PFII management structure is expected to cover administration, business licensing, ecosystem development, and operational management, while the supervisory body will oversee financial-service activities.

The government has also indicated that the PFII institutions should operate professionally, independently, transparently, and accountably while maintaining coordination with national authorities.

Regulatory Coordination Will Be Critical

Foreign financial institutions should closely monitor the division of authority between the PFII institutions and Indonesia’s existing regulators, including:

The Financial Services Authority;
Bank Indonesia;
The Ministry of Finance;
The Indonesia Investment Coordinating Board;
The Deposit Insurance Corporation;
The Directorate General of Taxes;
Immigration authorities; and
Other relevant ministries.

Key questions include whether a PFII licence will replace, supplement, or accelerate an existing sectoral licence and how consolidated supervision will apply to financial groups operating both inside and outside the centre.

Without clear coordination, investors could face duplicated approvals, overlapping reporting obligations, or uncertainty over which regulator has final authority.

4. The PFII Will Have a Special Court and Arbitration Institution

One of the most significant features of the law is the planned creation of:

A dedicated PFII arbitration institution; and
A special PFII court.

The court is intended to hear disputes arising from business activities within the PFII and certain international commercial disputes connected to the centre. The arbitration institution will provide an alternative dispute-resolution mechanism for participating businesses.

The Ministry of Finance has stated that the framework may adopt or adapt recognised international commercial-law principles and global best practices while preserving Indonesia’s legal sovereignty. The proposal was also discussed with the Supreme Court during the legislative process.

What Investors Should Verify

Foreign investors should examine the implementing rules covering:

The court’s exact jurisdiction;
Applicable procedural law;
Choice-of-law provisions;
Language used in proceedings;
Appointment and qualifications of judges;
Recognition of foreign judgments;
Enforcement of arbitration awards;
Interim and emergency relief;
Appeal procedures; and
Interaction with Indonesia’s general courts.

A specialised court can improve investor confidence only when its decisions are predictable, enforceable, and recognised across the broader Indonesian legal system.

5. Licensing, Immigration, Employment and Residency May Be Simplified

The government has indicated that the PFII will provide business facilities in areas such as:

Licensing;
Immigration;
Employment;
Residency; and
Other operational approvals.

These measures are intended to help international financial institutions recruit specialised professionals and establish operations more efficiently.

Potential facilities may include streamlined visas, residence arrangements, work permits, or special immigration treatment. However, their availability, duration, qualifying positions, localisation obligations, and application procedures will need to be established through implementing regulations.

Employers should also monitor whether PFII entities will be subject to special rules concerning:

Expatriate employment plans;
Work permits;
Mandatory Indonesian employee appointments;
Skills and knowledge transfer;
Social-security registration;
Individual income tax; and
Local employment contracts.

6. Anti-Money Laundering and International Tax Transparency Will Remain Central

The PFII is expected to apply international standards covering anti-money laundering, prevention of terrorism financing, tax-information exchange, and financial-sector compliance.

This is particularly important because the centre is expected to accommodate activities such as private wealth management, family offices, trusts, international investment structures, and foreign-currency transactions.

Prospective investors should prepare robust systems for:

Customer due diligence;
Beneficial-ownership verification;
Source-of-funds and source-of-wealth reviews;
Sanctions screening;
Politically exposed person screening;
Suspicious-transaction reporting;
Common Reporting Standard compliance;
Transfer-pricing documentation; and
Cross-border tax-information reporting.

The PFII should not be viewed as a secrecy jurisdiction. Its long-term credibility will depend on strong compliance with international transparency and financial-integrity standards.

7. The Location Has Not Been Finalised

At the time of writing, the government had not publicly finalised the location of the first international financial centre.

Bali has been mentioned as a potential location, but a final decision is still required. Government officials have also discussed the possibility that different centres could specialise in different sectors, such as maritime finance, aircraft leasing, Islamic finance, or wealth management.

The eventual location will affect several practical considerations:

Land or office availability;
Digital and physical infrastructure;
International flight connectivity;
Access to professional talent;
Data-centre and cybersecurity capacity;
Local-government support;
Environmental and spatial approvals;
Living arrangements for expatriates; and
Proximity to clients and domestic operations.

Investors should avoid signing long-term property or infrastructure commitments based solely on an assumed PFII location.

Who Could Benefit From the PFII?

The framework may be particularly relevant to:

Global Banks and Investment Banks

The PFII could provide an operating base for cross-border lending, structured finance, capital markets, project financing, and advisory services.

Wealth and Asset Managers

Fund managers may gain a platform for managing international portfolios, serving Indonesian clients, and distributing global investment products.

Family Offices

The PFII explicitly contemplates family-office activities, potentially providing an alternative to established centres such as Singapore and Dubai.

Insurance and Reinsurance Companies

The financial centre may support international risk placement, specialised insurance, reinsurance, and insurance-linked investment products.

Aircraft and Ship Leasing Businesses

Indonesia has specifically highlighted aircraft and maritime financing as areas where more transaction value could be retained domestically.

Fintech and Financial Infrastructure Providers

Payment companies, financial-data providers, regulatory-technology businesses, digital asset-service providers, and other financial innovators may find opportunities within the new ecosystem, subject to final licensing rules.

Professional-Service Firms

Law firms, accounting firms, tax advisers, corporate-service providers, appraisers, consultants, compliance firms, and technology companies may be needed to support PFII participants.

What Foreign Investors Should Do Now

Although the PFII is promising, investors should treat 2026 as a regulatory preparation period rather than assuming the centre is already fully operational.

A practical preparation plan should include the following steps.

Conduct an Eligibility Assessment

Determine whether the proposed activity falls within an approved PFII category and identify the licences that may be required.

Compare the PFII With Existing Structures

Assess whether operating in the PFII would be more efficient than establishing a conventional Indonesian foreign-owned company, representative office, licensed financial institution, or special-economic-zone entity.

Model the Effective Tax Position

Consider corporate income tax, the global minimum tax, withholding tax, VAT, customs, transfer pricing, and treaty access rather than relying only on the advertised tax holiday.

Review the Proposed Ownership and Governance Structure

Map the direct shareholder, ultimate beneficial owner, controlling entities, group regulators, and sources of capital.

Prepare Compliance Documentation

Begin preparing corporate records, audited financial statements, regulatory licences, beneficial-ownership information, source-of-funds evidence, compliance policies, and management profiles.

Monitor Implementing Regulations

The commercial viability of the PFII will depend on presidential regulations, government regulations, ministerial regulations, tax regulations, supervisory rules, and operational policies issued by the new PFII institutions.

Avoid Irreversible Commitments Too Early

Do not rely on announced tax rates, locations, visa facilities, or ownership arrangements until the relevant implementing regulation has been formally issued and reviewed.

Key Issues to Monitor During the Rollout

Foreign investors should pay particular attention to seven developments:

The final eligibility criteria for fiscal incentives;
Minimum investment and economic-substance requirements;
The formal location and sectoral focus of each PFII;
Licensing coordination with OJK, Bank Indonesia and BKPM;
Rules governing the special court and arbitration institution;
The interaction between PFII incentives and the 15% global minimum tax; and
Detailed immigration, employment and residency facilities.

These details will determine whether the PFII becomes a genuinely competitive international financial hub or primarily a long-term policy framework.

Outlook: A Major Opportunity With Execution Risk

The PFII Law signals Indonesia’s intention to compete more directly for global financial capital, cross-border transactions, and international financial talent.

Its combination of fiscal facilities, foreign-currency flexibility, specialised licensing, professional services, and dedicated dispute-resolution institutions could make Indonesia more attractive to global financial businesses. The framework could also support domestic infrastructure, maritime, aviation, digital-economy, green-finance, and strategic investment projects.

However, the success of the initiative will depend on execution.

Foreign investors will assess not only tax incentives, but also regulatory consistency, judicial credibility, supervisory independence, currency stability, compliance standards, and the speed of administrative processes.

Companies interested in the PFII should begin evaluating their investment structure now—but should make final decisions only after reviewing the implementing regulations and obtaining advice based on their specific business model.

Need Assistance Evaluating Your Indonesia Investment Structure?

The PFII could provide new opportunities for international banks, asset managers, family offices, leasing businesses, fintech companies, insurers, and professional-service providers. However, each investor will need to assess licensing, corporate structure, taxation, immigration, employment, and regulatory compliance before entering the ecosystem.

Accura can assist foreign investors with:

Indonesia market-entry assessment;
Foreign-owned company establishment;
Business-classification and licensing analysis;
Shareholding and corporate structuring;
Tax and regulatory coordination;
Immigration and expatriate employment preparation;
Beneficial-ownership compliance; and
Ongoing corporate compliance.

Contact Accura to assess whether the Indonesia International Financial Centre fits your regional expansion strategy and to prepare your business before the implementing regulations take effect.

Frequently Asked Questions

Has Indonesia officially approved the PFII Law?

Yes. The House of Representatives approved the PFII legislation during its plenary meeting on 21 July 2026. Investors should still verify the final promulgated text and all implementing regulations before relying on particular facilities.

Will every PFII company receive a 50-year tax holiday?

No. The announced corporate income tax facility is intended for qualifying investors. Detailed eligibility requirements, investment thresholds, and durations are expected to be governed by implementing regulations.

Can PFII companies conduct transactions in foreign currency?

The law provides special treatment allowing foreign-currency use for qualifying PFII business activities. Detailed transaction, accounting, reporting, and settlement rules still need to be confirmed.

Where will the first PFII be located?

No final location had been publicly confirmed at the time of writing. Bali has been identified as one potential location.

Does the 15% global minimum tax apply to PFII investors?

It may apply to entities that are members of multinational groups with consolidated global revenue of at least EUR750 million. Those groups should assess whether a top-up tax would reduce the benefit of any PFII tax holiday.

Main Sources

House of Representatives of the Republic of Indonesia: confirmation of the PFII Law’s approval and its principal institutional, fiscal, compliance, arbitration, and judicial provisions.
Ministry of Finance of the Republic of Indonesia: official explanation of the PFII’s policy objectives, business facilities, legal framework, and investment purpose.
MUC Tax Research: chapter-by-chapter summary of eligible activities, institutional structure, tax facilities, foreign-currency provisions, and dispute-resolution framework.
Reuters: reported investment projections, potential tax-holiday duration, foreign-currency facilities, intended investor categories, and possible locations.
Directorate General of Taxes and Fiscal Policy Agency: Indonesia’s 15% global minimum-tax rules for multinational groups with revenue of at least EUR750 million.