Economist: Need A Various Deepening Of Financial Products In Order To Attract Investment In The 'Family Office' Scheme

Executive Director of the Center of Economic and Law Studies Bhima Yudhistira. (Photo: Doc. Antara)

JAKARTA - Executive Director of the Center of Economic and Law Studies (CELIOS) Bhima Yudhistira said that a variety of financial products need to be deepened in order to attract investment in family office schemes or family-based fund management. "Products issued by financial service providers are very varied, so the product is specified with the needs of the family office," he said, quoted from Antara, Thursday, July 4. He explained the addition of financial product differentiation that can be applied in Indonesia in order to spur investment in family offices, among others, namely environmentally oriented financial instruments (Sustainable bond links), the thematic bonds for financing national strategic projects in the health, infrastructure, education, and telecommunications sectors (Sustainable Development Goals/SDGs bonds), as well as specific insurance for super rich people (custom high net worth individual/HNWI). He said that in order to present a variety product, there needs to be communication with financial service providers so that financial market deepening, and regulations are in accordance with family office needs. Furthermore, according to him, in addition to expanding financial product differentiation, the government must also provide guarantees of legal certainty, eradicating corruption, increasing competitiveness, and protecting personal data.

"Family office is a collection of assets from high net worth individuals, super-rich people. So they are very sensitive about personal data protection," he said. Furthermore, economic experts as well as Executive Director of the Segara Research Institute Piter Abdullah conveyed that the family office investment scheme is a trust-based business. Therefore, he wants the government to focus on building capacity (capacity building) in order to increase investment interest in the family-based fund management scheme, by proving the track record of financial management with a total budget of up to hundreds of trillions. "It is also possible that Indonesians can be as professional as fund managers abroad," he said. President Joko Widodo (Jokowi) previously gathered a number of ministers of Advanced Indonesia Cabinet and heads of state institutions to discuss potential investment schemes "family office" in an internal meeting at the Jakarta State Palace, Monday 1 July.

The government projects investment from family office-based fund management that can be withdrawn to Indonesia to reach 500 billion US dollars in the next few years. This amount is 5 percent of the total funds owned by family office companies in the world of 11.7 trillion US dollars. In addition, the Coordinating Minister for Maritime Affairs and Investment Luhut Binsar Pandjaitan targets an increase in gross domestic product (GDP) revenue and employment through a family office investment scheme. "He has to come here (Indonesia). For example, he has to invest how much 10 or 30 million US dollars, and then he also has to use Indonesians to work at family office earlier. So, that's what we will tax," said Luhut.