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Indonesia to follow Russian model to establish sovereign wealth fund
Unlike sovereign wealth funds in developed countries, Indonesia’s version will raise the required funds from private investors instead of from the country’s reserve funds.
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President Joko “Jokowi” Widodo chats with Abu Dhabi’s Crown Prince Sheikh Mohammad bin Zayed Al Nahyan during his visit to the United Arab Emirates on Jan, 12. During the meeting, Jokowi unveiled his plan to establish a sovereign wealth fund to attract foreign investment into Indonesia.
(Presidential Palace Press Bureau/Laily Rachev)
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ndonesian will follow Russia’s model to establish the sovereign wealth fund announced by President Joko “Jokowi” Widodo during his visit to the United Arab Emirates (UAE) in mid-January, a top ministry official has said.
Deputy State-Owned Enterprises (SOE) Minister Kartika “Tiko” Wirjoatmodjo said the fund would be different from the sovereign wealth funds of developed countries, like the United States or Norway, as Indonesia’s version would raise the required funds from private investors instead of from the country’s reserve funds.
“In countries with budget surpluses, the sovereign fund is used to invest in overseas projects, but ours will be similar to the Russian Direct Investment Fund [RDIF] and will be used as a catalyst for attracting direct investment into the country,” he said on the sidelines of the Mandiri Investment Forum 2020 in Jakarta on Feb. 5.
According to the RDIF’s website, the fund has invested and committed 1.7 trillion rubles (US$26.85 billion), of which 1.6 trillion rubles came from coinvestors, partners and banks. It has also attracted over $40 billion in foreign capital into the Russian economy through long-term strategic partnerships since its establishment in 2011.
Tiko said the SOE Ministry would provide suggestions and advice on the projects that would be financed by the planned sovereign fund.
“We will provide suggestions on the business framework for the fund, which will be directly overseen by the Finance Ministry,” he said.
Tiko added that the sovereign wealth fund would be established as a sui generis institution, meaning it will be an independent institution similar to the Indonesia Eximbank.
