Although there is no standard definition, the general consensus describes a family office as an investment vehicle that provides financial or non-financial services required by families.

Coordinating Maritime Affairs and Investment Minister Luhut Pandjaitan spearheaded the plan to facilitate family offices to capitalize on the shifting power dynamics caused by the changing legal and political landscape in Singapore and Hong Kong, the leading financial and investment hubs of the region. Indonesia will present itself as an alternative financial and investment hub for ultra-wealthy families, given the country’s economic growth, stable political climate and neutral geopolitical stance.

The investment from ultra-wealthy families is expected to drive economic development through increased spending by businesses and households, the creation of new jobs, and the use of local goods and services. In return, these families will enjoy tax incentives and exemptions provided by the government.

The general idea of establishing a family office is to create a vehicle that provides all sorts of services required by families, whether financial or non-financial. These services include asset and investment management, succession and estate planning, charity and other supporting services such as legal, tax, accounting, human resources and information technology (IT).

Families are free to design family offices with services that are tailor-made to their interests. Subsequently, to get the office running, families have to decide on the preferred investment vehicle, apply for the licenses and permits and establish the organizational structure.

In selecting the preferred vehicle, families take into account legal and non-legal considerations. Some of the legal considerations include the complexity of the establishment, reporting and compliance obligations, and the rights and protections offered to their assets.