Led by the INA, the US$300 million funding round also saw private global venture capital firms participate. It was a deal struck a little earlier, however, that attracted more attention, namely the purchase of toll road sections from a heavily leveraged state-owned enterprise (SOE).

At a combined length of 94 kilometers, the two sections bought from a subsidiary of state-owned construction giant PT Waskita Karya make up 8 percent of the trans-Java toll road.

While the move came as no surprise, as precisely this type of investment had been suggested by the INA in June last year, questions may be asked about the impression it creates on the foreign investors the wealth fund hopes to attract.

SOEs with heavy debt loads had reportedly been struggling to divest toll roads to other parties to ease their burden, until the INA came along.

It would be presumptuous for this paper to make judgment calls on specific investments, so whether this deal is motivated primarily by the prospective returns on investment or rather by an intention to help out an SOE in need, we do not know.

Based on the 2020 Job Creation Law, the INA was created to support the country’s economic development though real investment. It differs in this concept from other sovereign wealth funds around the world that are aimed at building up national savings for a rainy day.

Nonetheless, its investment propositions need to be appealing, because the government’s initial capital injections of $5 billion will not go far in the world’s fourth-most populous country. A multiple of that amount is supposed to come from co-investors.

If structured properly, working with SOEs should take some of the risk out of the deals for foreign investors by placing them on the same side with the government. However, that obviously does not mean the state and co-investors have identical interests in joint projects. While the government wants – hopefully – to further the development of the country, the co-investors want strong returns, and that is about it.

If the INA hopes to attract massive amounts of foreign direct investment (FDI), its projects must be attractive in themselves, irrespective of their role in serving national development goals.

When the INA was launched in early 2021, global markets were awash with liquidity created by central banks to prop up economic activities after the pandemic-induced slowdown. The situation could hardly be more different now, as a rapid and protracted rise in interest rates led by the United States Federal Reserve is seeing much of the funds previously available for emerging economies flow to the US.

For Indonesia to attract massive FDI in this environment, its offerings must be all the more enticing. It is crucial that the skilled professionals sitting on the INA’s board make decisions that draw in other investors, thereby serving the interests of the country and its people, and of generations to come. The government must grant it the sovereignty to do that.