Indonesian conglomerates are increasingly eyeing Hong Kong as a prime location for setting up corporate treasury centers as the Chinese special administrative region positions itself as a hub for firms looking to tap the mainland market, a Hong Kong government official says.

The interest was mainly driven by the robust trade relationship between Indonesia and China, along with the partial convertibility of the Chinese renminbi, making Hong Kong a viable option for these companies, said King Leung, global head of financial services, fintech and sustainability for Hong Kong state investment arm InvestHK.

"We noticed [interest from] some of [Indonesia's] large conglomerates. They have the need to set up a corporate treasury center in Hong Kong, as indicated by the trade numbers between the two countries," Leung told The Jakarta Post on Wednesday.

Hong Kong was Indonesia's third-largest trading partner last year after Singapore and mainland China, with a trade value of US$6.5 billion for the period January-December 2023.

The region is vying with Singapore to be the prime destination for Asia's family offices. While Singapore has traditionally been the preferred destination for Indonesian wealth, Leung expressed confidence that Hong Kong's deep and liquid capital markets, offering a wider array of investment products, as well as its vibrant tech industry, give it a competitive edge.

He noted that the territory's financial market depth was particularly appealing for start-ups that had already progressed through several financing rounds and were looking for greater funding to scale-up in preparation for early investor exits, possibly through an initial public offering (IPO) on the large Hong Kong stock exchange.

"We see money that was going to Singapore, including Chinese money, is now headed to Hong Kong," he said.

"Some family offices, even from mainland China, had set up shop in Singapore over the past two years but have now decided to come to Hong Kong."

Hong Kong's bond market was six to seven times larger than Singapore's, and the territory offered a much more appealing lifestyle, Leung claimed, highlighting these factors as key pull-factors for family offices.

"At the end of the day, if you're bringing $30 million or more to park in a place, you don't just want to put it in a bank. You want to have a variety of investment instruments and products to diversify your investment."

Hong Kong hosts nearly twice as many family offices as Singapore, according to a report published in March by the Hong Kong government and Deloitte. The city has 2,703 single family offices compared with Singapore's 1,400, according to Singapore Prime Minister Lawrence Wong.

Last year, Hong Kong's government announced measures to attract the wealth management offices of high-net-worth families to set up in the city, offering tax breaks and a revamped investment-migration scheme.

InvestHK had established a dedicated team to support family offices, Leung said, affirming the city's push to attract high-net-worth individuals and their capital.

Indonesian Employers Association (Apindo) chairwoman Shinta Kamdani visited Hong Kong in April to help Indonesian businesses establish family offices in the city and explore opportunities to facilitate entry to both Hong Kong and mainland China, Hong Kong newspaper The Standard reported.

Shinta, who led a delegation of around 20 business representatives, said the cooperation would cover a wide range of areas, including infrastructure and logistics.