JAKARTA (TheInsiderStories) - CEO of United States (US) International Development Finance Corporation (IDFC), Adam Boehler, has signed a letter of interest to invest US$2 billion to the Indonesia Investment Authority or Sovereign Wealth Fund (SWF) in Washington DC on Nov. 19, said the coordinating maritime and investment ministry office yesterday.
IDFC will also work with partners in Japan, the United Arab Emirates and Singapore to invest in the new body. As reported, 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 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.
President Joko Widodo, optimistic there are a potential the SWF to manage $20 billion funds after promulgation. The new entity shortly will establish after parliament approve the omnibus law. The optimism come after government do their effort, approached the potential investors, such as United Arab Emirates (UAE), Japan, Britain, Germany, and US.
Japan’ Softbank Corp., founder, Masayoshi Son, has expressed his commitment to invest another $2 billion in the country. Earlier, coordinating minister for maritime and investment, Luhut Binsar 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.
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
US$1: Rp14,100
Written by Editorial Staff, Email: theinsiderstories@gmail.com
