Jakarta Targets offshore Funds with New Trust Rules
JAKARTA: Indonesia is preparing to introduce regulations in 2025 establishing trustee institutions and special-purpose vehicles, aiming to attract both domestic and international investment and spur economic growth. The initiative will also enable state fund Danantara to establish a trust fund for onshore capital.
Masyita Crystallin, Director General of Financial Sector Stability and Progress at the Finance Ministry, highlighted the long-awaited nature of this framework for investors. She noted the plan aligns with President Prabowo Subianto’s focus on increasing capital inflows and bolstering domestic investment.
Currently,Indonesia’s civil law system lacks the legal structures common in common-law jurisdictions that allow for assets to be held and managed by a trustee. the new regulations, stemming from the 2023 financial sector law, will introduce concepts like the separation of legal and beneficial ownership, and “bankruptcy remoteness” – protecting assets from the insolvency of trustees or managers.
The move is part of a broader strategy to mobilize capital within Indonesia and deepen financial markets,specifically targeting funds currently held offshore,particularly in Singapore.These funds are frequently enough attracted to Singapore’s stronger legal protections and established trust structures.
Danantara, Indonesia’s sovereign wealth fund, intends to leverage the new framework to create a trust fund managing approximately US$1 billion over the next five years. Potential collaboration opportunities with organizations like the Gates Foundation in areas such as education, health, and poverty alleviation have been identified.
Masyita, 44, leads the directorate established in june to oversee the stability and development of Indonesia’s financial system. Her team is currently finalizing numerous regulations derived from the 2023 financial sector law. the government is also working on rules to demutualize the Indonesian stock exchange, transitioning it into a corporation open to a wider range of investors.
“We oversee the entire financial sector chain at a macro level,” Masyita stated, emphasizing the importance of ensuring sufficient financing resources, appropriate instruments, and regulations that can adapt to the rapidly evolving global financial landscape.
