Experts say the plan to encourage the establishment of family offices in Indonesia may not do much to promote industrialization and needs to be protected by strong laws and 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), criticized the plan, saying potential investors in such family offices would not have the intention 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 revenues as they would not be taxed.
The prominent economist added that Indonesia was facing a slowdown in manufacturing output and wealthy families who planned to build their family offices in the country currently had no plans to invest in factories.
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He stressed that Singapore also needed to be aware of the risk that family offices could facilitate illegal practices.
“Even in Singapore, where there are strong laws, they are now holding back the creation of family offices because they don’t want to be seen as a country that facilitates money laundering,” he said.
