Wealth in Indonesia: Sizing the Market Opportunity
This report analyzes Indonesia's wealth and retail savings and investments markets, with a particular focus on the HNW segment. Analysis is based upon our 2014 Global Wealth Managers Survey, our Global Wealth Markets Analytics, and our Global Retail Investments Analytics.
Reasons To Buy
- Size your potential client base using our proprietary data, presenting the number of affluent individuals by liquid asset band to 2019.
- Understand the drivers behind the growth of the affluent market, such as the wider macroeconomic environment and investment preferences.
- Quantify HNW asset allocations into non-liquid assets such as property. Find out how much of their investible assets are held offshore.
- How large is the HNW market in Indonesia?
- What is the penetration of affluent individuals in Indonesia?
- What is the current and future mix of asset class balances in Indonesia?
- How much of their wealth do Indonesian HNW individuals invest offshore?
- Which booking centers are used by HNW individuals to invest offshore?
The rich are getting richer. The Indonesian affluent account for only a tiny proportion of the total population but are growing - as of 2014, Indonesia's high growth rate has resulted in an affluent population that is more than twice the size it was in 2007. The affluent population is expected to number nearly 1.8 million by 2019.
Cash is still king. Take up of pro-cyclical investments such as equities and mutual funds remains low and deposits remain by far the preferred choice, encouraged in particular by current high interest rates. GDP growth forecasts are not expected to affect asset allocations significantly in the forecast period to 2019
Offshore investments remain a major element of the typical HNW Indonesian’s portfolio, with Singapore one of the main destinations. The drivers of offshore investment have circled back to worries about local economic stability rather than concerns about the lesser sophistication or expanse of onshore options in comparison to neighbors.
- Executive Summary
- The Indonesian wealth market is set for strong, continuous growth
- Key findings
- Critical success factors
- Sizing and Forecasting the Wealth Market in Indonesia
- Indonesia's economy is flowering, driving onshore wealth creation
- The affluent population numbers nearly 1.2 million, but there is potential for further rapid growth
- The majority of onshore wealth is concentrated among the mass affluent
- Drivers for Growth in the Indonesian Wealth Market
- The retail investment market will see strong growth
- Retail investments are expected to experience consistent growth going forward
- The Indonesian retail investment market is more diversified than most markets in Asia Pacific
- The Sharia investment market has enormous potential for growth
- Indonesia's large and fast-developing economy is driving the growth of all savings and investment asset classes
- Economic growth looks set to remain robust, and together with high interest rates will be a key driver for deposit growth
- GDP growth will continue to stimulate the bond market, particularly as the country invests in much-needed infrastructure
- The Jakarta Stock Exchange recovered in 2014, which should stem any negative impact on investment in equities and mutual funds after a poor 2013
- HNW Investment Preferences
- The onshore portfolios of Indonesian HNW individuals are well balanced between traditional and non-traditional investments
- Wealth managers have not been able to get HNW individuals significantly invested in alternatives besides property
- Alternatives should continue to grow as a proportion of HNW investments
- Offshore banking is still a major force in the Indonesian HNW market
- Local private bankers still have a lot of work to do to persuade HNW individuals to reinvest onshore
- Perceived local economic instability is preventing AUM from coming home
- Tax is a relatively limited driver for offshore investments
- Table Indonesian personal income tax rates, 2015 calendar year
- Singapore has been the primary but not sole beneficiary of offshore investment by Indonesians
- Abbreviations and acronyms
- Supplementary data
- Table Indonesia: adult population segmented by affluent category and asset band (000s), 2010-14
- Table Indonesia: adult population segmented by affluent category and asset band (000s), 2015e-19f
- Table Indonesia: total liquid wealth segmented by affluent category and asset band ($bn), 2010-14
- Table Indonesia: total liquid wealth segmented by affluent category and asset band ($bn), 2015e-19f
- Liquid assets
- Mass affluent
- Sharia investments
- Verdict Financial's 2014 Global Wealth Managers Survey
- Global Wealth Model methodology
- The main sub-model
- Global Retail Investments Analytics methodology
- Table Indonesian rupiah-US dollar exchange rate, December 31, 2012 and December 31, 2014
- Further reading