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Indonesia Investment Authority is now official

Posted 8 months ago by Lana Bowman

Foto Indonesia Investment Authority

After news spread late last year, it is official now! Indonesia has its own sovereign wealth fund, called the Indonesia Investment Authority (abbreviated as INA). On 16 February 2021, Indonesian President Joko Widodo announced the list of people that will this investment management institution. For starters, Widodo selected Ridha DM Wirakusumah - previously President Director of Bank Permata - as the CEO of INA.

 

The establishment of INA is part of the Omnibus Job Creation Law, which is targeted to be 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.

The Indonesian government seems to be aware that in order to fulfill its infrastructure development ambitions it is impossible to rely solely on state budgets and foreign debt, especially now the COVID-19 pandemic has hit the global economy. Moreover, so far, Indonesia's export earnings remain too dependent on commodities (which are characterized by volatile price movements). So, shocks in commodity-related sectors can certainly imply shocks to Indonesia's state revenue.

 

Moreover, the Indonesian government set aside IDR 15 trillion (approx. USD $1.1 billion) - taken from the 2020 State Budget - for INA's activities. This is followed by another injection of IDR 75 trillion (approx. USD $5.4 billion) in 2021. This surely seems like a big investment on the government's side. But once we put it into perspective, the figures seem justified.

 

Until the end of 2020, the Indonesian government collected investment commitments from various countries, ranging from the United Arab Emirates to the United States, amounting to USD $30.8 billion. If these commitments are indeed fulfilled, then Indonesia quickly recoups these public investments.

 

 

(source: Indonesia Investment)

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