T

he billionaires club in Indonesia is set to welcome new members.

In its latest “Wealth Report: Asia”, Julius Baer, a prominent Swiss private banking group, has identified Indonesia, alongside China and India, as the frontrunners of wealth creation in Asia.

The region is expected to witness the number of high net worth individuals (HNWI) reach 3 million by 2015.

As many as 1.46 million of these HNWIs — defined as those with investable assets surpassing US$1 million, excluding primary residences — will come from China with a total stock wealth of around $9.3 trillion, and 420,000 from India with $2.6 trillion.

“The number of high net worth individuals in Indonesia will increase to around 104,000 individuals in 2015 from 33,000 in 2010,” said Stefan Hofer, executive director of emerging markets strategy research at Julius Baer.

Based on the report, the wealth stock of these Indonesians could touch $518 billion by 2015.

“Indonesia exhibits the highest growth rate among HNWIs in all the countries we have looked at,” Stefan said in an exclusive interview with The Jakarta Post on Thursday.

According to Stefan, the number of high net worth individuals in Indonesia was growing at a rate of at least 25 percent annually, owing to the booming domestic business environment.

While the economies in the US and Europe continued to languish, and as countries such as Brazil ran out of steam, Indonesia posted 6.4 percent growth in gross domestic product (GDP) in the second quarter, slightly higher than the 6.3 percent exhibited in the first quarter.

Noted senior economist Fauzi Ichsan said that wealth in Indonesia had also accrued due to improved property and stock prices.

“There are two sources of riches. First, the valuation effect of higher priced assets, including property and shares, which are currently owned by the rich,” Fauzi said, adding that economic growth was the second source of riches.

With a total GDP of $846 billion last year, Indonesia is the world’s 16th-largest economy according to data from the International Monetary Fund (IMF).

“The backbone of the Indonesian economy is consumer spending, which generates more than half the total GDP. Hence, stocks of companies catering to household consumption may continue to do well,” he said.

Stefan added that “improvements in the business operating environment” had acted as a lubricant for businesses.

“Indonesia has made a lot of progress in the regulatory environment, making it easier for businesses to access credit, to register their businesses and so on,” he noted.

Besides regulatory improvements, an ample supply of labor, the linchpin of a “virtuous cycle”, bodes well for entrepreneurs.

Based on the report, 38.3 percent of Indonesians are employed in agriculture, with 42.4 percent and 19.3 percent in the service and industrial sectors, respectively. Meanwhile, around 44 percent of Indonesians are urbanized.

The rising consumption in Indonesia has become a springboard for wealth creation, especially for businesses within the service sector, although commodities, a “traditional” source of wealth for Indonesians, remained an essential driver in riches, Stefan said.

He also noted that “the long-term challenge or goal for Indonesia is to expand the manufacturing sector”.