ABSTRACT
This article highlights nearshoring strategies as a new approach to support the growth and management of family businesses in Southeast Asia. In this context, SW Singapore and SW Indonesia have built a collaborative partnership to deliver more integrated, efficient, and globally oriented services for family business clients. While family businesses play a dominant role in Indonesia, challenges related to succession, governance, and professionalization remain key obstacles. The nearshoring approach enables business-owning families to leverage Singapore’s strength as a family office hub, offering an attractive tax, regulatory, and investment ecosystem. On the other hand, Indonesia serves as a strategic partner due to its large domestic market and competitive cost structure.
A family business is an enterprise owned, operated, or managed by multiple members of a family. It often starts with a founder or a small group of family members and, over time, expands to include subsequent generations. These businesses can range from small local ventures to large conglomerates, and they typically carry strong values, long-term visions, and a deep sense of legacy.
In Indonesia, family businesses play a vital role in the economy. Significant portion of private enterprises in the country are family-owned. These businesses are particularly dominant in sectors such as retail, manufacturing, property, and trading. Many of the largest and most influential conglomerates in Indonesia started as family businesses and continue to be led by family members.
However, despite their strong presence, family businesses in Indonesia often face structural and managerial challenges. These challenges tend to intensify during generational transitions, when leadership is passed from the founder to the next generation. Issues such as unclear succession planning, conflicts of interest, lack of professional governance, and blending of personal and business finances are common.
A family office is a private wealth management entity established and operated by a high-net-worth family to oversee their financial matters. It can be structured as a trust, corporation, or partnership. Main reasons to set up a family office are:
- Wealth Control
Maintain control over finances and align asset management with family goals
- Succession and Estate Planning
Provide frameworks for smooth wealth transition and tax efficient asset transfer
- Improved Family Governance
Enhance transparency and accountability in family decision-making
- Philanthropy Support
Identify and support charitable causes aligned with family values and objectives
- Operational Efficiency
Outsource non-core activities to focus on key family operations
In the Southeast Asia region, the strategy to optimize family business is led by Singapore. Therefore, the Leading Partner for Family Business services from SW Indonesia is led by a partner from SW Singapore. Many Family Business investments and developments choose Singapore as a hub to reach more global investment companies.
Indonesia has a large market due to its population, area and many family businesses in Indonesia. In addition, Indonesia has competitive salary standards for working on Family Business projects.
Thus, Family Business nearshoring between SW Singapore and SW Indonesia is a very powerful form of collaboration to provide great benefits to clients. The infrastructure and competitive advantages of both countries greatly support effective nearshoring to serve family businesses in Southeast Asia.
In Singapore, the family office sector has grown significantly, increasing from 400 single-family offices in 2020 to 1,650 by mid-2024. The wealth management sector has shown strong performance, with an 8% rise in assets under management (AUM) in 2023 and a steady 5-year compound annual growth rate (CAGR) of 10%. This growth is expected to continue, with over 300 new family offices anticipated in 2024. Singapore’s quasi-territorial tax system, low corporate tax rate, and extensive tax treaties make it an attractive hub for Family Offices. The government offers three key tax incentive schemes-Section 13D, 13O, and 13U of the Income Tax Act-providing tax exemptions on specified income from designated investments to encourage Family Offices to base their activities in Singapore.
The following are key incentives conditions applicable to investment vehicles which are managed by and SFO that is exempt from licensing under the Securities and Future Act 2021:
Indonesia is entering a new era where family wealth management is no longer seen as just a luxury, but as a critical component of legacy building. The development of family offices and professional wealth management services reflects a shift in mindset—from wealth creation to wealth preservation and impact. Professional consultants are at the forefront of this transformation, helping families navigate complexity with structure, strategy, and stewardship. SW Indonesia provides wealth management services for family businesses in Indonesia who wishes to manage their financial wealth in another country, especially in Singapore and Hong Kong. The family office will be led by SW Singapore, in collaboration with SW Indonesia. With the right guidance, family businesses can preserve their legacy, grow sustainably, and thrive for generations to come.
