Indonesia Investment Authority: Sovereign Wealth Fund

- 23 February 2022 13:56 WIB
Indonesia will build new roads with its sovereign wealth fund.  ((Unsplash/Afif Kusuma))
Indonesia will build new roads with its sovereign wealth fund. ((Unsplash/Afif Kusuma))

JAKARTADAILY.ID – Sovereign wealth funds are state-owned investment funds managed by the governments of various countries. They provide a boost to the nation's economy and its citizens.

The funding for a sovereign wealth fund can come from various sources, such as surplus reserves from natural resources, bank deposits, and government transfers. Generally, some sovereign wealth funds are created for the specific purpose of investing in the private sector.

Similar to other types of investment funds, sovereign wealth funds have their objectives and risk tolerances. They can also vary depending on their assets and liability matches.

Indonesia's sovereign wealth fund, the Indonesia Investment Authority (INA), was officially launched in November 2020. President Joko Widodo named Bank Permata's former president director Ridha DM Wirakusumah as the CEO of the institution on 16 February 2021.

Indonesia's SWF program is a part of the realization of the Omnibus Job Creation Law. The law itself was established with aims for being the solution to investment bottlenecks in Indonesia, as well as an encouragement for foreign investors who are eyeing Indonesia but are uncertain due to the country's notoriously high degree of legal uncertainty.

In 2020, Indonesia's government allocated Rp 15 trillion for the funds' operations. It's followed by another Rp 75 trillion in the following year. Ridha Wirakusumah, the CEO of INA, noted that the fund's priority is to invest in toll roads, which are expected to create jobs and boost the nation's infrastructure.

Toll roads in Indonesia are expected to be expanded to around 5,000 kilometers in the next two years. Currently, the country has only about 2,346 kilometers of toll roads.

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The INA's plan to expand the toll road network is excellent news for companies that operate in the industry, such as Hutama Karya, Waskita Karya, and Jasa Marga. For instance, Waskita Karya plans to sell its stake in nine toll roads for about Rp 11 trillion.

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Editor: Suksmajati Kumara

Source: Investopedia


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