Navigating wealth in ASEAN: How HNWIs can protect and expand their legacy

The ASEAN region has witnessed remarkable economic growth in recent years, leading to a substantial increase in the population of High-Net-Worth Individuals (HNWIs) and families.

GDP growth accelerated in four out of the six countries in the region – Malaysia, the Philippines, Thailand and Vietnam – growing more in these countries in the second quarter alone than it did in the three preceding quarters, according to US consulting firm McKinsey’s latest Southeast Asia quarterly economic review.

Indonesia held steady while Singapore’s growth in the second quarter was a whisker (0.1%) down on the previous quarter. Strong performance across services and manufacturing sectors, particularly in electronics, helped boost the region’s economy. The Philippines and Vietnam continued as the region’s top two performing economies, growing at 6.3% and 6.9% respectively, with Malaysia coming in third with 5.9%.

This is driving wealth accumulation among the affluent in these nations and generating significant growth in the numbers of HNWIs across the ASEAN region. This article will look at the opportunities and challenges within these markets and examine the wealth preservation measures being adopted by HNWIs.

According to Knight Frank’s 2024 Wealth Report, the Ultra High Net Worth Individual (UHNWI) population in Asia exceeded 165,400 in 2023, with Singapore leading ASEAN’s growth trajectory. The city-state’s strategic location, political stability, and favourable tax regime have made it a magnet for wealth accumulation.

The report further predicts that the total number of UHNWIs living in Asia will reach around 230,000 by 2028, which is almost 40% more than in 2023 rate of growth an equivalent to around 35 new UHNWIs each day, fuelled by strong economic performance in India, Mainland China, Malaysia and Indonesia.

In Malaysia, the HNWI population has been steadily growing, particularly in urban centres like Kuala Lumpur. This growth is attributed to Malaysia’s diversified economy, which includes strong sectors in finance, oil and gas, and real estate.

Similarly, Indonesia, the largest economy in ASEAN, has seen significant wealth growth, particularly in Jakarta, where the concentration of HNWIs is highest. Thailand has also emerged as a key player, with its HNWI population expanding due to a robust tourism industry, real estate investments and an influx of wealthy expatriates.

Meanwhile, countries like Vietnam and the Philippines are witnessing rapid economic growth, leading to an increase in their HNWI populations, especially in cities like Ho Chi Minh City and Manila.

According to Knight Frank, the competition to host Asia’s newly minted wealthy is hotting up, with Hong Kong and Singapore leading the charge. Singapore is seeing success in attracting emerging wealth from Indonesia, Thailand, Malaysia and Vietnam, while Hong Kong will always be the dominant hub for wealth created in the Chinese mainland.

Significantly, Knight Frank’s Attitudes Survey – based on responses from more than 600 private bankers, wealth advisors, intermediaries and family offices – found that 42.3% of respondents expected their Asian clients’ total wealth to rise by more than 10% in 2024, compared to 13% in Europe and 11.8% in North America.

Trillions of dollars are also expected to shift to the next generation in Asia, reshaping the investment and wealth management landscape. Around 70,000 HNWIs from Asia are poised to pass on approximately US$2.5 trillion over the next decade.

The Sovereign Group is an independent, global trust company that has been established for over 35 years. We assist clients to preserve and manage their wealth via trusts and other structures, which can of primary concern given the dynamic and sometimes volatile nature of the ASEAN markets.

Trusts provide a robust legal framework for asset protection, safeguarding wealth from potential legal disputes, creditors and other risks. They further offer flexibility in estate planning, allowing HNWIs to manage the transfer of wealth across generations in a tax-efficient way.

We listen to our clients and any proposed solution will be tailored to their specific needs and circumstances – and those of their family members – to ensure that their assets, wherever located, are managed in line with their long-term wishes.

As the ASEAN region continues to grow as a hub for HNWIs, the need for sophisticated wealth management and preservation strategies has never been greater. Sovereign Group is well-positioned to assist HNWIs and families in navigating the complexities of wealth management and legacy planning in this dynamic region.

We offer expert guidance and tailored solutions to ensure your wealth is managed and preserved in the most effective way possible. Contact us today to learn more about how we can help you achieve your financial goals in the dynamic ASEAN region.

For further information, contact Alan Fong, Managing Director of Sovereign Trust (Hong Kong), by telephone on +852 2542 1177 or by email below.