Asian Economy: Overview, Growth and Development.


Byline: S. Kamal Hayder Kazmi

Only 13pc of Indonesian family businesses survive until 3rd generation

Family businesses account for almost all of businesses in Indonesia, employing millions of people and boosting the economy. However, their sustainability is a big problem as only 13 percent survive until the third generation, a consultancy firm says.

Deloitte Indonesia executive director Budiyanto said on Wednesday that some of the problems that people encounter when inheriting companies involve establishing or continuing international-standard professional and transparent working environments when their parents are no longer in charge.

"Generally speaking, only 30 percent of family businesses last until the second generation, 13 percent until the third generation and 3 percent beyond three generations," Budiyanto told the press during the firm's unveiling of the Deloitte Private service in Jakarta.

Deloitte Private provides consultancy services for four major types of private entities, namely family businesses, family offices, conglomerates (or high net worth individuals) and private equity firms. A major focus of Deloitte Private is to advise on succession plans for second generation and third generation inheritors.

"More than 95 percent of all businesses in Indonesia can be classified as family businesses, from small to medium enterprises [SMEs]. They play an integral role in opening millions of job positions and also boosting Indonesia's economy," said Deloitte Indonesia Country Leader Claudia Lauw on Wednesday.

Indonesia has the most high net worth individuals in Southeast Asia, with 130,000 people having total wealth of US$1.8 trillion, according to Credit Suisse Global Wealth 2019.

"We have noticed a growing demand from private enterprises...

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