Indonesia launches ‘Golden Visa’ to attract wealthy foreign investors

[JAKARTA] Indonesia has officially launched a long-term visa scheme aimed at attracting foreign investors on Thursday (Jul 25).

Under this programme, foreign investors with investments of up to US$10 million will receive a 10-year visa to facilitate access to South-east Asia’s largest economy.

The five-year “Golden Visa” requires individual investors to set up a company worth US$2.5 million, while a 10-year visa needs a US$5 million investment.

Individuals not looking to set up a company must place US$350,000 and US$700,000 to gain a five-year and 10-year permit, respectively, and the money can be used to buy Indonesian government bonds, public company stocks, or place deposits.

Corporate investors are required to invest US$25 million to get five-year visas for directors and commissioners. They need to invest US$50 million to gain a 10-year visa.

If the investment is made in the new US$32 billion capital city currently being built in the jungles of Borneo island, US$5 million will gain investors a five-year visa and US$10 million a 10-year visa, the immigration agency said.

Several countries offer similar investment visa schemes, but others, including Canada, Britain and Singapore, have scrapped such schemes as governments conclude they do not create jobs and could be a means to park speculative money.

On Thursday, Indonesian President Joko Widodo said the visa was intended to lure “good quality travellers” to the country.

“We are launching the golden visa to make it easier for foreign nationals to invest and contribute in Indonesia,” he said.

Silmy Karim, chief of Indonesia’s immigration agency, said 300 golden visas have been granted since it began testing the permits last year. This has resulted in about US$123 million in foreign investments.

He also said the authorities are discussing ways to grant a special status for foreign nationals of Indonesian descent, modelled after the Overseas Citizenship of India, which allows foreigners of Indian ancestry to visit, work and live in India indefinitely. That could be issued by October, Silmy added.

The immigration agency chief said the plan was intended to respond to calls for Indonesia to allow its citizens to hold another passport.

The concept of issuing golden visas originates from the country’s aspiration to establish itself as a premier investment hub in the region, aiming to attract top talents and high-net-worth individuals to invest.

The golden visa was initially proposed by Widodo in September last year following a visit by OpenAI founder Sam Altman.

Altman, a US citizen, became the first foreigner to receive a ten-year golden visa with an endorsement from Minister of Coordinating Maritime and Investment Affairs Luhut Pandjaitan. With a golden visa, Altman is able to bypass immigration queues at Indonesia’s airports, among other perks.

Pandjaitan, as reported by local media, expressed expectations that Indonesia could form partnerships with Altman’s companies to develop the artificial intelligence industry, with the GPT-4 large language model project as a pilot initiative.

Yose Rizal Damuri, executive director of the Center for Strategic and International Studies, said that while golden visas may seem appealing to foreign investors, they primarily act as incentives rather than the main factor in attracting investment.

“The golden visa is only a policy to facilitate investment, not the main pull factor. It doesn’t guarantee it can attract foreign investors,” he told The Business Times.

He said the government should focus on creating a conducive business climate, ensuring domestic security, and enhancing economic and labour productivity, rather than issuing regulations on the ease of residence permits.

The government introduced the golden visa programme as its second visa policy, following the “second home” visa scheme launched at the end of 2022.

The “second home” visa is mainly for wealthy elderly foreigners who want to retire in Bali or other popular tourist spots in Indonesia.

Launched in early 2023, it allows foreigners with an existing visa to apply for a stay permit of up to 10 years. Applicants must prove they have either two billion rupiah (S$165,530) in an Indonesian bank account or own luxury property in the country.

However, this requirement raised concerns among expat pensioners already living in Indonesia, many of whom could not meet the funds criteria but were still required to switch to the second-home visa. The government later issued a new regulation allowing current retirement visa holders to maintain their visa status.