The government will complete regulations related to sovereign wealth funds with the UAE, Japan's Softbank and International Development Finance Corporation (IDFC) next month - Photo by President Office.

JAKARTA (TheInsiderStories) – The government will complete regulations related to sovereign wealth funds with the United Arab Emirates (UAE), Japan’s Softbank and International Development Finance Corporation (IDFC) next month, the coordinating minister for maritime and investment affairs Luhut Binsar Pandjaitan said on Sunday (01/12). It intends to set legal basis and laws of the SWF project are clearer and friendlier for investors.

“Next month the Abu Dhabi Crown Prince Sheikh Mohamed bin Zayed (MBZ), Softbank’s Masayoshi Son and Adam Bohler of IDFC will meet again for SWF finalization talks with Indonesian state-owned enterprises minister as a leader,” the minister said in a written statement.

The SWF to shortly be established by Indonesia and UAE can be utilized for infrastructure development, including those in Indonesia’s new planned capital, Pandjaitan said. The two sides have agreed for US$22.89 billion projects, with UAE participation in it is 33 percent valued at $6.8 billion.

The economic cooperation between the two countries covers five areas of intergovernmental cooperation in the fields of religion, education, agriculture, health, and counter-terrorism. Moreover, there are also 11 business agreements including in the fields of energy, oil and gas, petrochemicals, ports, telecommunications, and research with an estimated total investment value of $22.89 billion.

The SWF scheme will serve as government-owned private equity that can be used as investment, especially for infrastructure development.

“The scheme, if approved, will be a form of government-owned private equity. It could serve as national reserves. It can also be used to develop new capital,” he stated.

The SWF will lower the burden of the state budget and accelerate the implementation of projects, he noted. He affirmed that both nations will shortly finalize a plan for the SWF scheme.

Pandjaitan pointed out that the infrastructure project financing scheme using SWF is not something new in the world. Several nations, such as Singapore, India, Egypt, Norway, and China, have adopted the concept.

The minister made the assurance that the SWF, serving as a pool for financing infrastructure, including those in the new capital, will not encounter a problem.

He noted that not only the UAE but also Softbank and the United States’ IDFC is tapping the possibility of setting up SWF with Indonesia. The two agency is tasked with offering foreign aid through the funding of private development projects.

Softbank Corp. founder Son last week expressed the commitment during a meeting with President Joko Widodo looking for another investment in the new capital city projects after declared to invest $2 billion in the country in July.

SoftBank Group has joined a growing list of global investors keen to participate in building a new $34 billion capital in Indonesia. Son, who met the president for the second time in six months, said SoftBank wanted to support the building of a smart and green city loaded with artificial intelligence, although he didn’t say how much his group would invest.

At the same time, CEO IDFC, Adam Boehler and the team said it prepare an investment $5 billion for Indonesia. At the meeting with Widodo on Friday, Boehler confirmed, IDFC ready to help Indonesia through private capital. The agency, he continued, is committed to improving the lives of Indonesian across the country.

The government has identified about 256,000 hectares of land on the island of Borneo for the yet-to-be-named capital – about four times the size of Jakarta. Widodo is counting on private and state-owned entities to bear about 80 percent of the cost of building the capital. Authorities plan to begin construction of the new city by the end of 2020 and relocate the capital in phases from 2024.

Written by Lexy Nantu, Email: lexy@theinsiderstories.com