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Independence 'key' for new sovereign wealth fund to be 'like Temasek'
Investment Authority of Indonesia (IAI) Danantara head Muliaman Darmansyah Hadad said the newly established sovereign wealth fund would act as a manager of government assets “separated” from the state budget.
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Singapore's investment fund Temasek has poured tens of billions of dollars worth of investment into assets around the world. (Bloomberg/Munshi Ahmed)
I
ndonesia’s newly established sovereign wealth fund must be functionally separated from existing institutions and free from political interference to ensure its long-term viability, analysts have urged.
Investment Authority of Indonesia (IAI) Danantara, which was created as one of President Prabowo Subianto’s first initiatives since he assumed office on Oct. 20, aims to consolidate assets from ministries and state-owned enterprises (SOEs) and optimize their value, similar to Singapore’s Temasek.
However, experts see a risk of overlap with functions of the SOEs Ministry as well as the Indonesia Investment Authority (INA), the nation’s existing sovereign wealth fund.
Muliaman Darmansyah Hadad, inaugurated by President Prabowo Subianto as head of IAI Danantara on Oct. 22, explained that the agency would act as an investment manager for government assets “separated” from the state budget, including assets currently managed by ministries and SOEs, which would allow the agency to evolve into a Temasek-style investment entity.
“The process will be gradual, starting with the establishment of the agency and its supporting regulations,” he said on Tuesday, as quoted by Kontan.
Following a meeting with the President on Monday, Muliaman said Prabowo had instructed him to “prepare well” for the body’s launch scheduled for Nov. 8, CNBC Indonesia reported.
He added that IAI Danantara’s establishment required a revision of the SOE Law.
