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Jakarta Post

United States’ DFC, Luhut discuss sovereign wealth fund

  • News Desk

    The Jakarta Post

Jakarta   /   Sat, October 24, 2020   /   09:21 am
United States’ DFC, Luhut discuss sovereign wealth fund International Development Finance Corporation (DFC) chief executive officer Adam Boehler (second left) and other executives of the institution meet with President Joko “Jokowi” Widodo at the State Palace in January 2020. (Antara/Puspa Perwitasari)

The United States-based International Development Finance Corporation (DFC) explored opportunities to invest in Indonesia's sovereign wealth fund in a meeting with Coordinating Maritime Affairs and Investment Minister Luhut Pandjaitan on Friday.

DFC CEO Adam Boehler, accompanied by US Ambassador to Indonesia Sung Yong Kim, met with the senior minister as part of the agency's itinerary during a visit to Jakarta this week.

The fund, which will soon be established awaiting derivative regulations of the Job Creation Law, is expected to "serve as an important instrument for infrastructure development in Indonesia", according to a statement published by Luhut's office on Friday.

Established in late 2019, the DFC finances development projects in lower- and middle-income countries.

The agency has expressed interest in investing in Indonesia’s planned sovereign wealth fund to finance infrastructure development across the archipelago. 

President Joko “Jokowi” Widodo announced in January that the DFC was planning to allocate US$5 billion for investment in Indonesia. Boehler visited Jakarta in the same month, during which he held a meeting with the President.

Read also: Indonesia to launch sovereign wealth fund in January next year

During Friday's meeting, Luhut claimed that the jobs law would improve the investment climate in the country while still prioritizing environmental and worker protection.

“Environmental sustainability is an integral part of risk-based licensing. For risky businesses, the environmental impact analysis [Amdal] is required before issuing a business permit,” Luhut said as quoted in the statement.

He went on to say that the Online Single Submission (OSS) system would make the licensing process more transparent.

In response, Boehler expressed his optimism that the Job Creation Law would serve as a breakthrough to fuel Indonesia's economic growth.

The DFC has previously discussed a number of infrastructure projects with the government, including the LRT, the trans-Java and trans-Sumatra roads, the hydropower plant in North Kalimantan and other renewable energy projects across the archipelago.

In contrast to common practices such as raising sovereign funds from balance of payment surpluses, fiscal surpluses and privatization, the Indonesian government is attempting to bring foreign investment into the sovereign wealth fund scheme to finance Indonesia’s infrastructure projects.

Besides the DFC, other global financial investment institutions such as the Abu Dhabi Investment Authority and the Japan Bank for International Cooperation (JIBC) are also said to be among the investors in the fund. (aly)