Family Office Plan; Luhut to Imitate UAE's Arbitration Courts
Translator
Dewi Elvia Muthiariny
Editor
Mahinda Arkyasa
Senin, 22 Juli 2024 16:23 WIB
TEMPO.CO, Jakarta - Economist and Director of the Center of Economic and Law Studies (Celios), Bhima Yudhistira, urged the government to conduct more in-depth research on the proposed establishment of a family office. Bhima expressed concerns, citing various studies suggesting that family offices often become tax havens with exceptionally low tax rates.
“Does Indonesia just become a tax haven or a place for money laundering?” questioned Bhima to Tempo on Tuesday, July 2, 2024.
In addition to potential concerns about tax havens and money laundering, Bhima also worries that family office investments might bypass the real sector, such as factory construction. Instead, the funds might solely be invested in financial instruments, such as stocks and debt purchases.
The plan to establish family offices was initially proposed by Coordinating Minister for Maritime Affairs and Fisheries, Luhut Binsar Pandjaitan. President Jokowi approved the proposal and summoned several ministers and officials to discuss its formation.
According to Luhut, integrated regulations regarding family offices are currently being drafted. One proposed regulation exempts individuals placing funds in the family office from taxation but requires them to make taxable investments.
“We will then tax the investments later,” stated Luhut via his official Instagram account, as quoted by Tempo on July 2, 2024.
He reported the plan to President Jokowi and President-elect Prabowo Subianto upon his return from visiting Abu Dhabi and Dubai in the United Arab Emirates.
“I just returned from Abu Dhabi. Last night, I reported to Pak Jokowi and Pak Prabowo about family offices and family business concerns,” he said at the launch event for Simbara at the Finance Ministry in Central Jakarta on Monday, July 22, 2024.
The senior minister acknowledged learning a valuable lesson about the importance of legal certainty during his visit to the two UAE cities. He emphasized to Jokowi that the government needs a simple policy to attract ultra-wealthy families to Indonesia. This policy, according to him, should be modeled after arbitration courts found in the UAE, Singapore, and Hong Kong.
He explained that arbitration courts utilize certified international judges. Once a decision is made by the judge, the defendant cannot appeal, eliminating opportunities for parties in dispute to "play again."
He stressed that if the government can implement arbitration, legal certainty will be realized in the country, attracting many people who want to come and invest their money in Indonesia.
Luhut further emphasized that family offices would not solely benefit foreign entrepreneurs operating in the country. This system would allow businessmen's money to enter the country's financial system, strengthening foreign exchange reserves.
“They must invest, and those investments must be taxed, generate jobs, and so on,” he concluded.
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