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[News] Indonesia's Sovereign Wealth Fund Is On The Making
Posted at: 20 March 2020

The government is currently on the track to establish a sovereign wealth fund — aimed at managing and allocating a sum of funding and/or state assets — which will also be used for, among other things, financing the development of Indonesia’s new capital in East Kalimantan and/or projects in Aceh. 

Sri Mulyani as quoted by The Jakarta Post claimed that the Saudi Arabian finance minister had agreed on the potential sectors that could be developed, though she declined to elaborate further. 

The formation of the sovereign wealth fund, however, still has to wait for the completion of the omnibus law on job creation, which will be discussed by the House of Representatives soon. 

Secretary to the coordinating economic minister Susiwijono Moegiarso explained that as a special agency, the sovereign wealth fund could be on par with the Indonesian Export Financing Institution (LPEI), which is a special body formed to support the implementation of national export financing activities. 

President Joko “Jokowi” Widodo had said during an annual meeting of the financial services industry last month that once the legal aspects of the sovereign wealth fund had been established, there would be an inflow of a minimum of $20 billion into the fund. 

Coordinating Maritime Affairs and Investment Minister Luhut Pandjaitan said in a statement on Jan. 13 that the United Arab Emirates (UAE), Japanese conglomerate SoftBank Group and the US’ International Development Finance Corporation (IDFC) would be among the investors in the sovereign wealth fund.

The UAE government has prepared $6.8 billion to invest in Indonesia’s development projects through a sovereign wealth fund, while the IDFC has pledged to invest $5.5 billion in Indonesia. SoftBank Group, meanwhile, has offered up to $40 billion to invest in the development of the country’s new capital city.

(source: The Jakarta Post)