Indonesia' government will set up a state investment agency to manage holdings in some of the biggest state companies after parliament passed a bill on Tuesday approving the body, which is intended to operate like Singapore's investment arm Temasek.

Indonesia has amended a law governing the Southeast Asian nation’s powerful state-owned enterprises, laying the legal foundation for a new agency to manage billions of dollars in state assets while seeking investments domestically and potentially overseas.

Indonesia's parliament will on Tuesday vote on a bill that will allow the government to set up a new investment agency expected to manage its stakes in some of the biggest state companies.