Indonesia’s parliament has passed a law enabling the creation of international financial centres to attract foreign investment and support economic growth.

The legislation forms part of the government’s broader effort to achieve an 8% economic growth target by 2029, according to Reuters.

House Speaker Puan Maharani led the acclamation to pass the law on Tuesday (21 July).

Lawmakers have indicated the law will provide tax incentives modeled on those offered by established financial hubs such as Dubai.

These incentives include a 50-year tax holiday for investors meeting specific criteria, exemptions on income generated outside Indonesia, and selective value-added tax exemptions.

The government expects the initiative to attract up to 500 trillion rupiah (US$27.89 billion) in investment.

Officials have not selected the location for the first financial centre, although they have previously identified Bali as a potential site.

To oversee the new financial centres, Jakarta will establish a dedicated government agency and a supervisory board reporting to the president and parliament.

The framework also includes a special court and an arbitration body to resolve disputes arising within the financial centres.

Featured image credit: Edited by Fintech News Indonesia, based on image by creativaimages via Magnific