Indonesia eyes regional wealth management hub status but ‘trust’ needed to attract investors
- Issues with Indonesia’s institutional capacity and governance could deter future investors, while legal changes may also be needed, analysts say
Indonesia is hoping to become a regional wealth management hub by opening single-family offices to lure in the wealthy, but experts say the country needs to “create trust” and transparency in its financial systems to compete with major players like Singapore.
The country’s Coordinating Maritime Affairs and Investment Minister Luhut Pandjaitan said earlier this month that Indonesia’s popular resort haven, Bali, had the potential to draw in the region’s ultrarich looking for institutions to oversee their assets.
“A lot of wealthy people will see Bali as an alternative place for them to invest their money in Indonesia,” Luhut said at a House of Representatives meeting.
“If Singapore, Abu Dhabi and Hong Kong can do it, why can’t we have it also?” he said, adding that Indonesia could see financial inflow of between US$100 million and US$1 billion from these offices, which support wealthy individuals seeking to manage their assets and investments.
The senior minister also said last week that he had received the green light from outgoing President Joko Widodo, who had agreed with his plans to open the family offices in Bali.
Luhut noted the high proportion of family-owned businesses in Indonesia creates significant domestic demand for family office services that can help with philanthropy and succession planning. As such, these offices would also enable wealthy families to retain their assets in Indonesia instead of moving them abroad, he added.