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Indonesian Government to Establish Family Office to Attract Wealthy Investors, Says Luhut Pandjaitan

Indonesian Government to Establish Family Office to Attract Wealthy Investors, Says Luhut Pandjaitan
Indonesian Government to Establish Family Office to Attract Wealthy Investors, Says Luhut Pandjaitan. Image Source: SinPo.id

The Indonesian government plans to establish a family office to attract funds from wealthy families to Indonesia, thereby encouraging the country’s economic growth.

This plan was conveyed directly by the Indonesian Coordinating Minister for Maritime Affairs and Investment, Luhut Binsar Pandjaitan. He further divulged that this plan had been approved by President Joko Widodo himself.

“I said, ‘Mr. President, if you agree, let’s try it here’. And [Jokowi replied] ‘I agree, Mr. Luhut’,” Pandjaitan told the press on Sunday, the 23rd of June.

Pandjaitan had also announced his appointment as the head of the task force regarding the establishment of a family office, which was formed on the 1st of July. He hoped that the preparations could be completed within three weeks.

Family Office is a private company that provides investment and wealth management for families of massive wealth. It is typically created to effectively grow and transfer wealth between generations. An establishment of a family office in Indonesia could attract wealthy families who, otherwise, usually keep their investment assets in countries such as Singapore, Hong Kong, and Dubai.

Furthermore, one of the benefits of a family office, highlighted by Pandjaitan, is its potential for managing funds as high as US$500 billion (equivalent to approximately Rp8,178.8 trillion).

“Then, they [wealthy families] must also employ Indonesian people to work in their family office. That’s what we’ll tax later,” noted Pandjaitan on his personal Instagram page in early July.

The plan to establish a family office in Indonesia is not without scepticism. The Executive Director of the Centre of Economic and Law Studies (CELIOS), Bhima Yudhistira, remarked that Indonesia is not yet ready to establish a family office. To establish it, the government must have a strong commitment to ensure that policies do not change easily. Moreover, there is a possibility that a family office could be misused as a means of money laundering by wealthy individuals.

“Hoping that a family office is established in Indonesia is still far-fetched. The conditions must include legal certainty, personal confidentiality, and next-to-zero money laundering,” Yudhistira told the press on Friday, 5th of July.

Additionally, the recent case of a ransomware attack on the Temporary National Data Centre (Pusat Data Nasional Sementara or PDNS) has the potential to make potential investors, including wealthy families, think twice about placing their valuable assets in Indonesia.

“They would feel worried about investing in a country with weak data protection, worried that their data will be leaked,” Yudhistira added.

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