JAKARTA, July 20 (Reuters) – An Indonesian parliamentary panel on Monday agreed with the government on key provisions in a bill for the foundation of international financial centres aimed at drawing in foreign financial investment.
Limited details have been released to the public as of Monday, but authorities have previously said the bill will lay out tax incentives similar to those offered in financial hubs like Dubai, and that the holiday island of Bali was one potential location.
Indonesia, Southeast Asia’s biggest economy, has for a long time sought to develop its financial sector and hopes to provide wealth management services to rival neighbouring Singapore, where many rich Indonesian families choose to invest.
The finance ministry has said such an international financial centre could attract between 300 trillion rupiah and 500 trillion rupiah ($16.7 billion to $27.82 billion) in investments, including the setting up of foreign bank branches and other business entities.
The bill’s deliberation was fast-tracked, with parliamentary scrutiny over its details only starting on July 2. Wider approval is expected in a vote on the bill scheduled for Tuesday in parliament, which usually follows recommendations of the panel.
The bill covers rules about the governmental body for the financial centres that reports to the president and parliament, the financial committee’s deputy head Mohamad Hekal said.
It also calls for an arbitration body and a special court to examine and adjudicate cases within the financial centres, Hekal said.
Incentives offered under the bill include a 50-year tax holiday for investors that meet certain criteria, tax exemptions for income generated outside Indonesia, and some exemptions on value added taxes, lawmaker Thoriq Majiddanor said.
There were also special rules about inheritance tax, Hekal said, without providing details.
($1 = 17,970 rupiah)
(Reporting by Stefanno Sulaiman, Gayatri Suroyo; Editing by Martin Petty)
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