Senior minister, Luhut B. Pandjaitan, announced the investment commitment from the Japan Bank for International Cooperation (JBIC) of US$4 billion for the establishment of Indonesia' Sovereign Wealth Fund - Photo by the Indonesian Embassy Office

JAKARTA (TheInsiderStories) – Senior minister, Luhut B. Pandjaitan, announced the investment commitment from the Japan Bank for International Cooperation (JBIC) of US$4 billion for the establishment of Indonesia’ Sovereign Wealth Fund (SWF). The commitment delivered after he met governor of JBIC, Maeda Tadashi, in Tokyo, yesterday.

“JBIC is ready to support SWF Indonesia’ funding, twice as much as what was conveyed by the International Development Finance Corporation (IDFC), a financing institution from the United States (US),” he said in a written statement on Friday (04/12).

He said, the commitment will be immediately followed up with the technical level and it is hoped that JBIC investment can begin to enter Indonesia in the first quarter of 2021. For background, the government regulation of the SWF Indonesia will be completed in mid-December.

Last month, US’ IDFC CEO Adam Boehler and Panjaitan, has signed a letter of interest to invest $2 billion to the Indonesia SWF in Washington DC.

While, Japan’ Softbank Corp., founder, Masayoshi Son, also has expressed his commitment to invest another $2 billion in the country. Earlier, Panjaitan stated, the funds gathered in SWF will utilized for infrastructure projects, including for Indonesia’ new planned capital. He said, UAE participation at the Fund around $6.8 billion.

He revealed, the SWF scheme will serve as government-owned private equity that can be used as investment, especially for infrastructure development. Panjaitan also stated, the SWF will lower the burden of the state budget and accelerate the implementation of projects, he noted.

He 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. Soon, Indonesian government will form SWF with an initial capital of Rp15 trillion (US$1.63 billion), as an implementation of the Omnibus Law for Job Creation.

The initial capital form in cash and state property or state receivables to state-owned enterprises or private companies. The presence of the Indonesia SWF was expected to invite the investors. The formation of new body is specifically regulated in the chapter on central government investment and the ease of national strategic projects.

This institution will be supervised by state own enterprises (SOEs) minister, finance minister, professionals, and directly report to the President. The law also regulates state and SOE assets that can be used as investment by the central government to the body. 

These assets can also be transferred directly to the joint venture company formed by the agency. Further provisions regarding transfer shall be regulated in a government regulation. In 2019, the values of state property after revaluation reached Rp10,467 trillion and the SOE assets reached Rp8,092 trillion in 2019.

Indonesia SWF is a state-owned institution or body that is tasked with managing public funds and placing them in various investment instruments. Sources of funds can come from foreign exchange reserves, trade surpluses, budget surpluses, as well as state revenues from natural resources

Beside met JBIC, Panjaitan aslo met the Japanese minister for economy, trade, and industry (METI), Kajiyama Hiroshi, talked on a number of strategic bilateral cooperation, including the country commitment to realize MRT Jakarta Phase 2 on time. After visited Japan, the minister and his team are scheduled to meet his counterpart in Abu Dhabi and Saudi Arabia on Saturday talking on the same issues.

US$1: Rp14,100 

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