Jakarta, CNBC Indonesia – Coordinating Minister for the Economy Airlangga Hartarto revealed that President Joko Widodo (Jokowi) has already named the state endowment fund or sovereign wealth fund (SWF) which will be formed by the government as a mandate of the Omnibus Law Cipta Kerja (Ciptaker) Law.
The Ciptaker Law has been ratified by the Plenary Session at the DPR on Monday this week (5/10/2020) and states that there will be an Investment Management Institution (LPI) aka the government owned SWF with an initial capital of IDR 15 trillion.
“The name proposed by the President is the Indonesian Investment Authority,” said Airlangga, in the Squawk Box program on CNBC Indonesia TV, Thursday (8/10/2020).
“The Indonesian Investment Authority will have a capital of up to Rp 75 trillion and this leverage will invite SWF from other countries,” he explained.
He said it was matching fund amounting to US $ 5 billion or the equivalent of Rp. 75 trillion (exchange rate of Rp. 14,900 / US $), of course, it is hoped that SWF Indonesia can attract other investors.
Thus, Indonesia has the tools to encourage investors, not only from foreign direct investment (FDI), not only through the Investment Coordinating Board (BKPM) but through the Indonesian Investment Authority.
“Like other countries, Malaysia has Khazanah, Singapore has GIC and Temasek as well as various countries have SWF. Thus, investment instruments in Indonesia are more complete,” said the former Chairman of the Indonesian Listed Companies Association.
Previously, Minister of Finance Sri Mulyani Indrawati emphasized that it was not a dream for Indonesia to be able to generate an investment fund of IDR 225 trillion, which would be generated from SWF.
The minister explained that the initial capital for the formation of the SWF would reach Rp 75 trillion. The initial capital will come from a combination of state assets, assets of State-Owned Enterprises (BUMN), and other sources.
On further rules on the operation and formation of the SWF, said Sri Mulyani will be further regulated in the Government Regulation (PP).
“In the PP, we will regulate the LPI with the capital participation specified in the PP which consists of equity in cash funds, BUMN shares, in which we hope that the value will reach Rp 75 trillion,” Sri Mulyani explained in a press conference on Wednesday. (7/10/2020).
In the early stages, said Sri Mulyani, it is possible that the capital fund will be formed in the form of cash with a value of Rp 30 trillion.
In this initial stage of capital, it will come from state-owned goods (BMN), shares in BUMN companies, and state receivables.
“Now it has been discussed is the injection of equity in the form of cash, the value of which reaches up to Rp 30 trillion,” he said.
With equity that could reach Rp 75 trillion, the government hopes to triple the investment funds or reach Rp 225 trillion.
According to Sri Mulyani, the SWF model that will be built by RI will be combined with development fund and stabilization fund, which would make international SWFs like Singapore’s Temasek, Abu Dhabi’s SWF and so on.
As an institutional structure, the SWF will consist of a Supervisory Board and a Board of Directors, where the Supervisory Board consists of the Minister of Finance, the Minister of BUMN and 3 persons from professional circles.