Indonesia’s House of Representatives has officially passed the landmark Indonesia International Financial Center (Pusat Finansial Internasional Indonesia/PFII) bill into law.
“To all factions, can the PFII bill be approved for enactment into law?” asked Speaker of the House of Representatives Puan Maharani at the House of Representatives building in Jakarta on Tuesday (21/7/2026).
The House approved the motion with unanimous support across all participating factions.
Mohamad Hekal, Vice Chairman of House Commission XI, noted that deliberation on the PFII legislation moved quickly following its kickoff on July 2, 2026. The process included public consultation rounds from July 6-9 and intensive working committee sessions on July 9-20, 2026.
The newly enacted PFII Law outlines the establishment, governance, objectives, and permitted business scope within the financial zone. The regulation introduces a multi-tiered regulatory and judicial ecosystem, including a PFII Advisory Council, a PFII Board, a Management Authority, a Financial Services Supervisory Agency, an Arbitration Center, and a dedicated PFII Court.
Operating as a specialized judicial body, the PFII will hold jurisdiction over disputes arising from commercial and financial activities within the center.
Driving Capital Into the Real Economy
Speaking a day prior during the working committee report and decision-making meeting on the PFII bill in House Commission XI, Minister of Finance Purbaya Yudhi Sadewa stated that establishing the PFII intends not only to centralize financial sector activity, but also to improve funding for the real economy. The PFII is expected to drive productive investment, create jobs, boost economic growth, and elevate Indonesia’s competitiveness as an international financial hub.
“The establishment of Indonesia International Financial Center intends to elevate Indonesia’s global competitiveness as a financial hub while bolstering our national economic sovereignty,” Minister Purbaya stated.
PFII is poised to encourage financial depth and market innovation, as well as draw domestic and foreign investments.
It will prioritize funding for strategic infrastructure, sustainable and climate-related financing, and national projects.
The hub will also advance domestic capital markets, fintech, digital finance, Islamic finance, the broader green and blue economies, along with industrial transformation.
0% Income Tax Incentives Underway
To attract international players, the PFII Law offers a diverse suite of incentives, including income tax breaks, exemptions on value-added tax (VAT) and luxury-goods sales tax, and customs incentives. The government is also preparing special incentives, such as golden visas, immigration, labor permits, licensing privileges, and residency options.
The Ministry of Finance confirmed that specific eligibility criteria for qualifying financial services, which could see corporate tax rates slashed up to 0%, will be detailed in an upcoming Government Regulation (Peraturan Pemerintah/PP).
"The parameters will be governed under a PP," explained Herman Saheruddin, Director General of Financial Sector Stability and Development at the Ministry of Finance, speaking at the Parliamentary Complex, Jakarta, on Monday.
Herman clarified that financial services eligible for the 0% tax rate must satisfy specific criteria, including the influx of foreign investment into the PFII. However, he cautioned that a 0% tax rate does not exempt companies from all tax obligations. PFII tax incentives remain subject to global minimum tax (GMT) rules.
“A 0% rate doesn’t mean paying zero across the board. Firms remain subject to the Global Minimum Tax,” Herman noted.
Targeting Long-Term Foreign Investment
The government emphasized that one of the PFII’s primary objectives is to attract long-term foreign investment to Indonesia. Herman stated that the PFII's underlying strategy is to secure sticky capital rather than volatile portfolio flows.
We designed the PFII to attract long-term foreign direct investment, so capital stays committed rather than flowing in and out freely,” Herman said.
To qualify, financial institutions opening in the hub must establish a distinct legal entity or registered firm locally.
“The core principle is to encourage them to build their companies here,” Herman noted.
This requirement applies equally to domestic companies seeking entry into the zone. They must establish a financial sector entity within the PFII and comply with government requirements. Domestic firms also stand to qualify for the 0% tax incentive, under criteria to be further detailed in an upcoming PP. Nevertheless, Herman reiterated that the PFII is primarily designed to attract foreign direct investment.
“If we rely solely on domestic capital, the piece of the pie remains small,” he added.
PFII and SEZ Synergy
The Ministry of Finance dismissed concerns that the PFII would cannibalize Indonesia’s existing Special Economic Zones (SEZs). Instead, the two models come with different priorities and will complement one another. SEZs focus on industrial manufacturing and physical trade, while the PFII concentrates on cross-border financial services and foreign capital mobilization.
“There is no conflict with SEZs, as they will reinforce each other to drive broader economic growth,” Herman remarked.
To seamlessly integrate international markets, the PFII Law introduces several operational flexibilities. Business operations may officially utilize English, and transactions within the center may be conducted in foreign currencies.
Furthermore, the governing regulations permit the adoption of international jurisprudence and legal standards, international commercial law, and global financial center best practices, provided they align with principles of fairness and propriety.
The legislation also establishes detailed provisions governing estate and inheritance taxes, initial investment structures, regulatory reporting, and administrative compliance penalties for entities, experts, and third parties operating within the PFII.
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