Indonesia’s new golden visa will attract top talent, boost sluggish property market

[JAKARTA] Indonesia’s new golden visa scheme will go a long way to attract the top foreign talent, as well as give a boost to the country’s sluggish real estate market, said analysts.

Earlier this week, OpenAI chief executive Sam Altman became the first person to receive this visa, which carries numerous perks such as priority security screening at airports, longer stay periods, and entering and leaving the country more easily.

Indonesia launched the golden visa last week in a bid to stimulate economic development. Individuals must establish an Indonesian company worth at least US$2.5 million to receive a five-year visa, or double that amount for a 10-year visa.

Those who don’t want to establish a local entity can invest at least US$350,000 into shares of a local public company, deposit or savings accounts, or Indonesian government bonds, to be eligible for the five-year visa, or US$700,000 for the 10-year visa.

Directors and commissioners of businesses can obtain a five-year visa if their company invests at least US$25 million, or US$50 million for the 10-year visa.

Director-general of immigration Silmy Karim said in a statement: “We are rolling out the red carpet in return for the resources they provide to Indonesia.”

Donald Wihardja, the CEO of MDI Ventures, a state-backed venture capital firm, said the visa will make it easier for Indonesia to attract “quality foreign” talent.

He said that digital businesses could use this opportunity to secure funding for their operations, expansion plans, or research and development.

“We actually do not (just) need Altman’s money, but (it’s) his ability to bring innovation, maybe via a partnership with OpenAI, that is much more valuable. That is what we want,” he told The Business Times.

The golden visa is expected to provide foreign entrepreneurs with easier access to South-east Asia’s largest economy and let them tap into the country’s large consumer base.

According to latest figures, Indonesia’s digital economy was worth US$77 billion in 2022, a 22 per cent increase from the previous year. Indonesia currently accounts for nearly 40 per cent of the overall value of all digital economy transactions in South-east Asia.

Indonesia’s sluggish real estate sector could also get a much-needed boost in the coming years due to the spillover effect from the golden visa policy, industry players said.

Syarifah Syaukat, a senior research adviser at property consultancy Knight Frank Indonesia, said there is likely to be greater foreign investment and new market opportunities in the real estate industry.

She cited the capital Jakarta, as well as Batam and Bali, that could benefit from the greater demand for new homes as more people receive their residency permits.

A recent study conducted by Knight Frank pointed to Portugal’s golden visa scheme, which sparked substantial demand in the country’s prime property markets.

The controversial scheme – which offers residency rights to non-European Union nationals in exchange for investments, including in real estate – has been blamed for causing home prices and rentals to spike.

Nearly 12,000 residency permits have been granted since the scheme was launched in 2012, with a total of 6.8 billion euros (S$9.9 billion) in investment, most of it going into real estate.

Indonesia’s property market continues to grapple with weak demand, exacerbated by high interest rate policies. The sector is also still recovering from the impact of the Covid-19 pandemic in 2020 and 2021.

Joko Suranto, chairman of the central board of Real Estate Indonesia, told BT that there is plenty of growth potential when it comes to foreign buyers looking for homes in Indonesia.

“Foreign property transactions currently constitute 5 per cent of the national turnover, yet this segment represents the future market,” said Suranto. “The presence of foreign markets sets off a significant domino effect, (which will lead) to improved investment prospects for Indonesia.”

Karim, the immigration director-general, said that many other countries in the world – including Denmark and the United Arab Emirates – that have implemented similar golden visa policies are already reaping the benefits.

Indonesia’s golden visa is the second major scheme rolled out by the government in the past year to attract well-to-do foreigners to settle in the country. Last October, a second-home visa programme was introduced to entice wealthy elderly foreigners to apply to stay for up to 10 years, if they fulfilled certain criteria such as providing proof of funds of a minimum of US$181,600.