In transferring the business control to the scions, the white paper said families would need to balance preservation and business continuity with “NextGen ambitions”. — Bloomberg
PETALING JAYA: Wealthy Malaysian families are finding it challenging to groom capable successors for their businesses, a trend that is also notable in several other key Asian countries.
In a white paper issued by UOB, Boston Consulting Group and the National University of Singapore, it is said that more than 40% of businesses in Malaysia, Singapore, Indonesia and Thailand are founder-led.
“However, the current leadership cohort within those markets are approaching their sunset years (over 70 years old), indicating a wave of succession is approaching.
“Regulations are not the only constraint – passing down of family businesses also abides by traditions and norms, such as a bias towards sons within Chinese families and Islamic-influenced inheritance laws within Indonesia and Malaysia.
“Diversified business groups – prevalent within Indonesia, Malaysia, and Thailand – face an additional layer of challenge in grooming capable heirs who can manage different segments of the family business.”
For families that run companies with diversified businesses, the white paper said that specialised structures are needed to transfer ownership without fragmentation.
“In 25 years, Asia’s share of global private wealth has climbed from 6% to 21%. By 2029, the value of the region’s private wealth is expected to reach US$99 trillion, a quarter of the global total.
“Asia stands at a critical juncture for intergenerational wealth transfer. More than 60% of the region’s high-net-worth individuals are over 60, with much of their wealth tied to family businesses that have expanded rapidly in recent decades.”
In transferring the business control to the scions, the white paper said families would need to balance preservation and business continuity with “NextGen ambitions”.
The NextGen refers to the next generation of wealth inheritors and business leaders. They are said to increasingly prioritise personal ambitions such as starting their own business ventures and pursuing social impact over preservation of the family business.
“While 28% of founders cite a lack of interest from the NextGen as a succession challenge, 72% see their children as likely successors. However, within this group, 24% believe their successors are underprepared.”
Using the data compiled by Forbes, the white paper said that about 44% of businesses related to the top 20 richest people in Malaysia are already under the NextGen leadership.
This compares with Singapore (37%), Thailand (44%), Taiwan (45%), Indonesia (53%) and Hong Kong (63%).
In mainland China, the percentage only stood at 5% as its family businesses were among the youngest within the region, with the majority of them still founder-led.
The white paper also noted that business succession includes preserving and transferring intangible assets to ensure continuity.
Such intangible assets are, to name a few, the knowledge of running the firm, long-term strategy, stewardship through board roles, family values, heritage, and influence accumulated over generations.
These assets are deeply rooted in legacy, reputation, and networks that often extend into politics, communities, and business associations.
“Such qualities create lasting advantages: a family name that opens doors, values that guide decisions, and trust that binds employees and partners.
“Yet these roots can also be fragile. Unless these assets are deliberately transferred and instilled in the next generation - through mentorship, board participation, and exposure to key networks - they risk fading, eroding the family’s edge.”
The white paper surveyed 228 randomly selected high-net-worth individuals (HNWIs)across seven Asian markets such as mainland China, Hong Kong, Taiwan, Indonesia, Malaysia, Singapore, and Thailand.
The HNWIs span across diverse ages, gender, and business ownership profiles, with investable assets between US$5mil and over US$30mil.
