Indonesia Finalizing Family Office, Aims for Pre-October Launch

TEMPO.CO, Jakarta - Coordinating Minister for Maritime Affairs and Investment Luhut Binsar Landjaitan said the government is finalizing the formation of a family office. The target is to complete the details before October 2024, coinciding with the potential transition of power from President Joko Widodo or Jokowi to Prabowo Subianto.

Luhut said he has promised tax incentives to foreign entrepreneurs who invest in Indonesia through the family office program. However, specific details such as investment amounts, minimum thresholds, and staffing requirements for family offices are considered technical matters and will be finalized before the government transition.

“I believe these are still technical details, but they need to be finalized before October,” Luhut told reporters at the Finance Ministry office in Central Jakarta on Monday, July 22, 2024.

The senior minister recently visited the United Arab Emirates (UAE) and met with ministry-level officials. This visit highlighted the importance of legal certainty in attracting investments. The UAE utilizes arbitration courts with international judges, where decisions are final and appeals are not permitted.

He shared these insights with President Jokowi, advocating for a similar concept in Indonesia. He proposed establishing an arbitration court staffed by judges from Singapore, Abu Dhabi, or Hong Kong to enhance legal certainty for investors in Indonesia. 

“I reported this to President Jokowi, and he expressed his appreciation,” Luhut said.

Concerns from Economists

Bhima Yudhistira, an economist and Director of the Center of Economic and Law Studies (Celios), argued that the government needs a more comprehensive study. According to him, some research suggests that countries with family office programs often become tax havens with exceptionally low tax rates.

Moreover, he worries that family office investments might bypass the real sector, such as factory construction. Instead, the funds might solely be directed toward financial instruments, such as stocks and debt purchases.

HAN REVANDA PUTRA

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