Indonesia is forecast to suffer a net loss of around 600 US dollar millionaires in 2022, putting it in the Top 10 countries globally that are predicted to lose more high-net-worth individuals (HNWIs) than they attract this year, according to the latest Henley Global Citizens Report, a study which tracks private wealth and investment migration trends across the globe.
What were the findings of Henley & Partners’ study?
The Q2 report released by citizenship by investment advisory firm Henley & Partners, reveals that emerging and developed economies in the Southeast Asia region are rapidly catching up with the traditional high-income markets when it comes to the generation of private wealth.
Strong HNWI growth forecast for Southeast Asia
The projected 2022 net inflows and outflows of US dollar millionaires (the difference between the number of HNWIs who relocate to and those who emigrate from a country) forecast by New World Wealth and featured on the Henley Private Wealth Migration Dashboard show that over the next decade, the number of HNWIs in many countries in the Global South are forecast to grow at significantly higher rates than their Global Northern counterparts.
For example, Vietnam’s HNWI growth is expected to be a remarkable 100% by 2031 compared to just 20% in the United States and 10% in France, Germany, Italy, and the United Kingdom. The Philippines is projected to grow its dollar millionaires by 40% over the next 10 years, with both Thailand and Malaysia forecast to enjoy 30% growth.
FutureMap founder and international bestselling author Dr. Parag Khanna said, “Globalization is not dead — and certainly not from the perspective of Asia, where inward capital flows are rising since the post-Covid reopening and genuine investments in productive capacity.”
“With multiple factory floors, multi-trillion-dollar economies, rapid urbanization, rising middle class, and surging tech penetration, Asia’s ascent remains the major economic story.”
Scott Moore, Managing Director and Head of the Indonesia and Philippines offices at Henley & Partners, says in terms of developed markets in the region, Singapore continues to attract a significant number of millionaires, mainly from the rest of Asia. “Net inflows of about 2,800 HNWIs is expected in the city-state in 2022. ANZ are also forecast to continue their run as major wealth hub magnets with 10-year HNWI growth rates of 70% and 60% respectively.”
Commenting on Singapore in the Henley Global Citizens Report, award-winning journalist Misha Glenny said, “Singapore, a consistently appealing destination for wealth, appears to have benefited from China’s crackdown in Hong Kong over the past two years.”
Australia has attracted large numbers of HNWIs, with a forecast net inflow of 3,500 in 2022 — the second highest. Andrew Amoils, Head of Research at New World Wealth, said the 2022 projection is moderate compared to recent years, with inflows peaking at 12,200 in 2018.
“New World Wealth estimates that over 80,000 US dollar millionaires have moved to the country over the past 20 years. The high inflows are partly due to Australia’s points-based immigration system, which favors wealthy individuals, business owners, and professionals.”
“Australia also has a first-class healthcare system that is relatively simple for incoming high-net-worth individuals to pay their way into, unlike the US, where healthcare insurance can be complicated and expensive, especially for older HNWIs,” Andrew Amoils further commented.
Spike in demand for investment migration options
Henley & Partners saw much-increased interest in residence and citizenship by investment program options from several countries in Q1 compared with last year, including Australia, the Philippines, and Thailand. However, the biggest growth in enquiries in 2022 has come from New Zealand, with Henley & Partners reportedly processing more than 50% of the enquiries it received in the whole of 2021 in the first three months of the year alone.
Moore says enquiries from the Oceania have skyrocketed, and particularly in Australia owing to impending changes to rules about individuals’ tax residency. “If spend fewer than 183 days a year in Australia, it is unlikely that you would be required to pay tax in the country. However, the proposed new rules could include a secondary test to establish tax residency.”
“This would consider aspects like whether an individual has the right to reside in Australia, owns local assets, has family members in the country, and the extent of their general economic ties to Australia. While these changes are yet to be implemented, families are aware of the need to plan ahead to minimize effect of future developments on their wealth.”
Significant expansion of wealth management sector
Commenting in the Henley Global Citizens Report, President of BDO Private Bank Inc., Albert S. Yeo, says the key to wealth management, especially in the Philippines, is to listen to clients’ needs and help them understand key global trends and events and their impacts.
“Liquidity is the lifeline of the investment world. An approach that centers around helping clients in all areas, from insurance, to investments and planning, and so on, brings success.”
“The wealth management sector in the Philippines is in a robust phase of growth, at rates of 25% a year, which is well above more mature markets. To keep this momentum, the industry needs to attract, retain, and foster talent to ensure that clients receive the appropriate level of attention through the inevitable market ups and downs,” Albert added.