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Political goals control Indonesia’s sovereign wealth fund
Government interference in the Indonesia Investment Authority (INA) may impair the sovereign wealth fund’s efforts to attract investment to Indonesia.
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A toll gate of the Pasuruan-Probolinggo toll road is seen in East Java in April 2019. The 31-kilometer toll road, which cost Rp 2.9 trillion (US$204.8 million) to build, is part of the trans-Java toll road that stretches from Merak, Banten, to Probolinggo in East Java. (The Jakarta Post/Seto Wardhana)
E
xperts have warned that government interference in investment decisions of Indonesia Investment Authority (INA), especially if motivated by political goals, may impair the sovereign wealth fund’s effort to draw investment to the country.
Since its foundation in February 2021, INA has dealt with a wide range of projects, from toll roads and airports to tech companies.
Recently, the sovereign wealth fund was enlisted to purchase toll roads to save a debt-laden state-owned construction company.
The government has also asked INA to help with investment in the megaproject for a new capital city to be located in East Kalimantan, following the exit of Japan’s Softbank earlier this year.
This month, INA was tasked with facilitating investment in the Abadi liquefied natural gas (LNG) project in the Masela Block to replace oil-giant Shell.
Financial-sector expert Manggi Taruna Habi, who has held positions in notable financial institutions, said many of the tasks for INA were aimed at attracting external funds for domestic-infrastructure projects, for which the government was short in cash. In this approach, the INA resembled India’s National Investment and Infrastructure Fund (NIIF).
By contrast, the Government of Singapore Investment Corporation (GIC) and the Norwegian Oil Fund (NOF) focused on wealth creation by actively investing the respective country’s surplus funds in a diversified range of assets either overseas or abroad.
