Wed, 06 Jan 2010
From:
By Joyce Koh
Singapore. Sandiaga Uno, the second-youngest man on Forbes’s Indonesia rich list, says private bankers inundate him with investment pitches and have offered everything from wine-tasting and concerts to karaoke evenings and gambling trips to Macau to solicit his business.

“Almost every bank that comes here makes a courtesy call,” Uno, 40, whose fortune is estimated at $400 million, said in an interview in Jakarta. “I used to feel, Wow.’ Then I realized it’s not only me getting it, but a lot of other people.”

Private banks including Credit Suisse and Julius Baer Group are expanding in Indonesia as political stability and economic growth persuade the rich to keep more money in the world’s fourth-most populous country. That’s posing a challenge for wealth managers in Singapore, where Merrill Lynch and Capgemini have estimated Indonesians held more than $90 billion in 2006.

At a time when private banks are shifting their focus to faster-growing markets in Asia, Indonesia’s richest people are accumulating wealth more rapidly than anywhere in the region outside China. The assets of Asian millionaires will exceed those of their North American counterparts by 2013, according to the annual global wealth survey by Merrill and Capgemini.

Indonesia’s economy may double in the next six years as the world’s biggest exporter of power-station coal and the largest producer of palm oil taps surging demand from India and China, according to a July report from CLSA Asia-Pacific Markets, which said Indonesia, China and India are Asia’s “next growth triangle.”

The Jakarta Composite Index jumped 123 percent last year in dollar terms, making it the best-performing Asian benchmark, according to data compiled by Bloomberg.

“In 10 years’ time, when we look at GDP, average wealth and concentration of wealth, this will be one of the major markets in the world,” said Francois Monnet, Credit Suisse’s head of private banking for Southeast Asia and Australasia.

The country’s 40 richest people doubled their combined wealth to $42 billion last year, according to Forbes. Among 12 countries Forbes tracks in Asia Pacific, only China equaled that growth.

More of that wealth is staying home, as investor confidence is buoyed by political stability under the country’s first popularly elected president, Susilo Bambang Yudhoyono. That marks a turnaround since the ouster of Suharto in 1998, when the economy collapsed during the Asian economic crisis and thousands of rich Indonesians fled the country.

“More and more wealthy Indonesians would like to bring their money back into Indonesia,” said Rizal Prasetijo, managing director of PT JP Morgan Securities Indonesia.

Most international private banks like JPMorgan Chase UBS and Merrill Lynch still serve Indonesia from Singapore, which has sought to build a reputation as the region’s wealth-management centre. The city-state has relied on low taxes and sophisticated financial services to create a financial hub rivaling Hong Kong.

In 2004, the government made capital gains on domestic and overseas investments tax exempt, and foreigners can apply for residency if they place 5 million Singapore dollars ($3.6 million) in a financial institution registered with the central bank.

Assets managed in Singapore surged to 864 billion Singapore dollars ($619 billion) in 2008 from 280 billion Singapore dollars in 2000, according to the central bank. Singapore’s proximity to Indonesia helped make it a haven for the capital exodus that followed the Asian financial crisis. The economic collapse focused public anger on ethnic Chinese, who accounted for less than 5 percent of the population but controlled more than 70 percent of Indonesia’s economy.

About a third of Singapore’s millionaires were actually Indonesians living in the city-state, according to a 2007 study by Merrill and Capgemini.

“If I were building a wealth management business, I’d first build a good Indonesia business and look after it,” said Roman Scott, managing director of Singapore-based Calamander Capital. “Indonesia is the giant of small nations.”



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