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Caution urged in govt’s plan to invite family offices to Indonesia
In its plan to establish Bali or the future capital as a global hub for family offices the government must be cautious to prevent money laundering, experts urge.
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Tech billionaire Elon Musk (left) walks with Coordinating Maritime Affairs and Investment Minister Luhut Pandjaitan during his arrival at I Gusti Ngurah Rai International Airport in Denpasar, Bali on May 19, 2024. (AFP/Sonny Tumbelaka)
E
xperts say the plan to encourage the establishment of family offices in Indonesia may not do much to further industrialization and must be ring-fenced by robust laws and solid planning to ensure the initiative does not give rise to money laundering.
Faisal Basri, a senior economist at the Institute for Development of Economics and Finance (INDEF), has criticized the plan, arguing that the potential investors in such family offices would not plan to invest in the country’s industrialization and that Indonesia could become a hub for money laundering.
Faisal told CNN Indonesia on Thursday that family offices would not increase state income, given that they would not be taxed.
The prominent economist added that Indonesia was facing a manufacturing slowdown and that wealthy families planning to build their family offices in the country currently had no plans to invest in factories.
Read also: Indonesia eyes $100-200 million inflow from family offices, Luhut says
He noted that Singapore too had to be mindful of the risk that family offices could facilitate illegal practices.
"Even in Singapore, where there are robust laws, they are now holding back on creating family offices, because they don't want to be seen as a country facilitating money laundering," he said.
