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Indonesia’s sovereign wealth fund should look 'beyond infrastructure'
Indonesia’s sovereign wealth fund should diversify into technology and private equity to attract foreign capital.
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Hundred dollar bills are seen in this photo illustration.
(AFP/Getty Images/Brendan Smialowski)
I
ndonesia’s sovereign wealth fund should diversify its investment beyond infrastructure projects to attract foreign capital, while maintaining transparency, according to the Institute for Development of Economics and Finance (Indef).
Indef economist Eko Listiyanto said that while infrastructure projects were still profitable, the global trend showed that sovereign wealth funds invested more in private equity than infrastructure, citing International Forum of Sovereign Wealth Fund (IFSWF) data.
The organization’s annual review in 2019 showed that the global sovereign wealth fund investment in infrastructure declined to 12.8 percent of the total investment in 2019 from 20.7 percent in 2015, while investment in private equity grew to 61.9 percent form 41.4 percent over the same period.
Meanwhile, based on the trend in the last three years, investors have been increasingly tapping into the technology and telecommunication sector, including healthcare technology, software and the internet, he said.
“As this is a long-term investment, investors think the [investments] that can yield returns and profits are the technology and telco [sectors], while we go toward infrastructure,” he said in a press briefing on Wednesday. “If we want to target foreign funds, we should pay attention to their interest in private equity.”
He added that while the sovereign wealth fund could be an alternative funding for the government’s infrastructure projects, the high cost of investment in the sector might also deter investors.
