Indonesia’s golden visa attracts wealthy investors, raises concerns over money laundering, housing costs

The visa scheme was launched last Thursday, making it easier for foreign nationals to invest and contribute their wealth, skills, or expertise to Southeast Asia's largest economy, Nikkei Asia reported.

Individual investors must establish a company valued at US$2.5 million to obtain a five-year visa or $5 million for a ten-year one.

Alternatively, they can secure a 5-year or 10-year permit by placing funds of at least $350,000 and $700,000, respectively. The money can be placed in deposits or used to purchase Indonesian government bonds and public company stocks.

Another category of golden visa allows individuals to stay for five years by making a deposit of $130,000 in a government-owned bank and buying an apartment valued at $1 million or above.

For corporate investors, a $25 million investment is required to secure five-year visas, and a $50 million investment is needed for ten-year visas, applicable to their directors and commissioners.

The program would have a multiplier effect on the country, enhancing capital gains, job creation, and technology transfer, Asia News Network quoted Indonesian President Joko Widodo as saying last Thursday.

Silmy Karim, head of the country’s immigration agency, said that the new visas will create opportunities for foreign companies already established in Indonesia.

They will also reduce the presence of digital nomads and long-term visitors who contribute little to the local economy while living in tourist destinations like Bali on tourist visas.

Since launching the pilot program for the permits last year, Indonesia has issued nearly 300 golden visas, gaining $123 million in investments.

Nonetheless, experts have raised concerns over potential threats of cross-border money laundering and other criminal activities, as well as housing price inflation.

Many countries, such as Canada, the U.K., and Singapore, have discontinued similar investment visa programs after determining that they do not generate employment and may serve as a way to park speculative money, as reported by Reuters.

"The countries that have revoked the golden Visa policy have anti-money-laundering measures that are stricter than Indonesia, and even they think that the golden Visa will enable cross-border money laundering and illegal investments," Bhima Yudhistira, executive director at the Jakarta-based Center of Economics and Law Studies (Celios), told SCMP.

He added that the golden visa alone may not have an immediate impact as investors are adopting a "wait-and-see" approach during the government’s transition period, with the current president due to step down in October.

Portugal's golden visa program previously permitted foreigners to obtain residency by purchasing property, which led to a rise in property and rent prices. It amended its policy earlier this year, removing real estate investment as a route to residency.

Nailul Huda, an economist with Celios, told SCMP: "If golden visa holders can own land in Indonesia, that could be a threat to Indonesian citizens. Land ownership could eventually shift from Indonesians to foreigners, and it could lead to protests from residents."

Regarding these concerns, President Widodo emphasized that the visas are intended for "good quality travelers" who contribute positively to the economy and not those who pose a threat to national security.

"[Authorities] must carefully select and evaluate the contribution [of each applicant]," Asia News Network quoted him as saying.

In response, Silmy Karim said that his office will implement a stringent vetting process for all golden visa applicants, which will include coordination with Interpol and the Financial Transaction Reports and Analysis Center.