Family Office: Economist Warns of Tax Haven, Money Loundering Potential

TEMPO.CO, Jakarta - An economist, and Director of the Center of Economic and Law Studies (Celios) Bhima Yudhistira said the government needs to conduct a thorough study before establishing a family office. 

According to Bhima, various studies show that countries housing family offices are often used as a tax haven for granting low tax rates. These countries include Giblatar, Panama, and the Virgin Islands. “Will Indonesia be taken advantage of as a tax haven or for money laundering?” Bhima told Tempo on Tuesday, July 2, 2024.

Additionally, Bhima also worried that family office investments would not be used for real sectors such as factory development, and instead be limited to financial instruments, such as purchasing shares and debt securities. "If that's the case, the impact on the economy will also be relatively limited," he said.

Moreover, according to Bhima, Indonesia has yet to meet the criteria for establishing a family office. A family office requires low tax rates, comprehensive financial markets, and complete financial infrastructure. Some of the countries/ cities that qualify with these criteria are Singapore, London, and Hong Kong, Bhima said. 

Regarding the plan to establish a family office, the Coordinating Minister for Maritime and Investment Affairs Luhut Binsar Pandjaitan said Indonesia has the opportunity to benefit from a family office by attracting wealth from other countries to boost national economic growth.

Moreover, Luhut said, The Wealth Report data shows that Asia’s super-rich population is expected to grow 38.3 percent from 2023 to 2028. Meanwhile in Indonesia, it is envisioned to grow 34 percent.

"There is US$11 trillion in funds just looking for a place to perch, and most are in Singapore, Dubai, and Hong Kong. We are offering (to house the fund), formulating the regulations," said Luhut in an Instagram post on Tuesday. 

Nevertheless, Luhut stressed that the government avoids money laundering so interested foreigners are obliged to invest and come to Indonesia.

RIRI RAHAYU

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