The Indonesia Family Office initiative is set to transform the nation into a global hub for wealth management. Chairman of the National Economic Council, Luhut Pandjaitan has proposed launching this initiative in February 2025.
This ambitious plan aims to attract ultra-wealthy investors, strengthen the economy, and establish Indonesia as a prime destination for family office services. By offering tax incentives and focusing on strategic locations, the initiative promises significant benefits for the nation’s financial sector.
What Is a Family Office?
According to Cresset Capital, a family office is a private firm that manages the wealth and investments for a family or a group of families. In essence, these offices facilitate the smooth transition of assets from one generation to the next.
Typically, they serve wealthy families with investment assets ranging from 50 to 100 million USD. These firms provide a unified strategy for managing family wealth, including investment management, financial planning, estate planning, and specialized services like philanthropy or legal compliance.
The Indonesia Family Office Plan focuses on turning the country into a leading wealth management hub in Asia. This initiative aims to attract investors by offering competitive tax incentives and a strategic location for managing global assets.
Key Features of the Indonesia Family Office
The Indonesia Family Office Plan encompasses various types of family offices designed to cater to the unique needs of ultra-wealthy families. These include:
- Founder’s Office: Manages the wealth of family business founders, ensuring their assets extend beyond the business operations.
- Shareholders Office: Focuses on overseeing the financial interests of family shareholders within business ventures.
- Family Enterprise Office: Balances risk and rewards to ensure the long-term preservation of family wealth across generations.
- Multi-Generational Office: Caters to diverse branches of a family, ensuring financial harmony and efficient wealth distribution.
- Investment Office: Prioritizes strategic investments across asset classes, helping families diversify their portfolios.
- Compliance Office: Handles legal and financial compliance, offering robust administrative support to families.
- Trustee Office: Oversees family trusts with fiduciary responsibilities to protect long-term wealth.
- Philanthropy Office: Supports charitable endeavors, aligning with the family’s philanthropic goals and values.
Strategic locations like Bali and Nusantara have been identified as key hubs for these family offices. Bali’s global reputation as a tourism and lifestyle destination makes it an attractive choice for investors, while Nusantara represents a forward-looking opportunity as Indonesia’s new capital.
Economic Impact and Investment Opportunities
Luhut Pandjaitan emphasized the importance of competitive incentives to attract global investors. “We don’t want to lag behind our neighboring countries. Our mindset needs to shift—not just focusing on our own profits but also considering the benefits for investors,” he stated as reported by CNN.com.
He also added that Indonesia’s policies should balance national and investor interests to remain globally competitive. One strategy is to offer attractive incentives, such as tax-free obligations on initial capital investments, making Indonesia highly appealing to wealthy global investors.
The Indonesia Family Office initiative offers several benefits to the economy. It aims to increase foreign investment by drawing global capital into strategic sectors. Additionally, it is expected to provide long-term economic stability by fostering steady investment flows.
The mandatory use of local labor will create significant job opportunities for Indonesian professionals in the financial sector. With competitive regulations and incentives, Indonesia has the potential to become a leading global wealth management hub.
Timeline and Government Support
The plan, first introduced during President Joko Widodo’s administration, is set for implementation in February 2025. Luhut Pandjaitan stressed the need for rapid action, stating, “We want to move quickly. If I may suggest, we can implement this next month. We’ve studied this for a long time.”
Luhut Pandjaitan explained that Prabowo Subianto supports the initiative, stating, “It must continue. The president agrees with this. We just need to take further steps.”
Luhut further emphasized that many countries, including Singapore, Abu Dhabi, and Hong Kong, have already adopted similar strategies to stabilize their financial markets and boost investments. With strong government backing, this initiative is positioned to make Indonesia a leading global wealth management hub.
Closing Thoughts on Indonesia’s Family Office Plan
The Indonesia Family Office initiative is a bold step toward attracting global wealth and boosting the national economy. With strategic incentives, government support, and key locations like Bali and Nusantara, Indonesia is on track to becoming a competitive wealth management hub by February 2025.
Source: cnn.com, liputan6.com, cressetcapital.com
Image: Antara Foto/Nyoman Hendra Wibowo