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Can Indonesia’s Sovereign Wealth Fund Attract Foreign Investors?
Indonesia introduced its first sovereign wealth fund, the Indonesia Investment Authority (INA) in 2021. Unlike other sovereign wealth funds, the INA explicitly seeks foreign co-investors to capitalize on the fund rather than rely on commodity revenues.
The government hopes the INA will attract investments in infrastructure, the digital economy, logistics, the financial sector, tourism, and supply chains, among others.
Indonesia is looking to foreign investors to help build its sovereign wealth fund, in a bold experiment to address the country’s infrastructure needs.
In 2021, the Indonesian government created the Indonesia Investment Authority (INA) – the country’s first and only sovereign wealth fund. The government hopes that the fund will finance much-needed investments in infrastructure and emerging industries, ultimately spurring growth in Southeast Asia’s largest economy.
What is Indonesia’s sovereign wealth fund?
The INA, however, has a key difference from most other sovereign wealth funds. Rather than being financed from Indonesia’s revenues from commodities, the Indonesian government envisions the INA being financed by private investment – including foreign investment. This is despite the fact that Indonesia is a resource-rich country.
The INA has sought to attract direct investments through infrastructure and industry projects, such as investments in transportation, supply chains, logistics, digital infrastructure, the green economy, healthcare services, the financial sector, technology, and tourism. More specifically, this includes investments in airports, seaports, fiber optics, data centers, and the development of Indonesia’s new capital city.
This article was first published by AseanBriefing which is produced by Dezan Shira & Associates. The firm assists foreign investors throughout Asia from offices across the world, including in in China, Hong Kong, Vietnam, Singapore, India, and Russia. Readers may write to [email protected].
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