Jakarta – Finance Minister Sri Mulyani Indrawati hopes to get Saudi Arabia on board to invest more in Indonesia, particularly through the planned sovereign wealth fund that is to be channeled for projects intended to aid the country's development.
The minister's efforts to offer investment projects through the sovereign wealth fund to Saudi Arabia came amid what she described as sluggish economic conditions in the United States and China, two countries that had been Indonesia's main investment sources.
She explained that according to a survey – which was unnamed – investments from the US and China had decreased. Meanwhile, investment from Japan, another foreign investor in Indonesia, had been relatively stable.
"On the other hand, investment from Saudi Arabia has increased significantly. This situation can be optimized to increase the Saudi Arabian investment in Indonesia," Sri Mulyani said in a written statement on Monday as quoted by kontan.co.id.
In 2018, the Middle Eastern kingdom was ranked 40th on the list of Indonesia's sources for realized foreign investments, with US$5.3 million invested that year, an increase from $3.5 million invested in 2017, according to the Investment Coordinating Board (BKPM).
The government is currently on the track to establish a sovereign wealth fund – aimed at managing and allocating a sum of funding and/or state assets – which will also be used for, among other things, financing the development of Indonesia's new capital in East Kalimantan and/or projects in Aceh.
Sri Mulyani claimed that the Saudi Arabian finance minister had agreed on the potential sectors that could be developed, though she declined to elaborate further.
The formation of the sovereign wealth fund, however, still has to wait for the completion of the omnibus law on job creation, which will be discussed by the House of Representatives soon.
Secretary to the coordinating economic minister Susiwijono Moegiarso explained that as a special agency, the sovereign wealth fund could be on par with the Indonesian Export Financing Institution (LPEI), which is a special body formed to support the implementation of national export financing activities.
"Take as an example, the LPEI. We are confused about whether it is a bank or a non-banking finance institution [IKNB], but we know that the institution has special authority. Similarly, the sovereign wealth fund will later have special authority to represent the sovereign status of the government," Susiwijono explained as quoted by a Kontan report on Jan. 19.
President Joko "Jokowi" Widodo had said during an annual meeting of the financial services industry last month that once the legal aspects of the sovereign wealth fund had been established, there would be an inflow of a minimum of $20 billion into the fund.
Coordinating Maritime Affairs and Investment Minister Luhut Pandjaitan said in a statement on Jan. 13 that the United Arab Emirates (UAE), Japanese conglomerate SoftBank Group and the US' International Development Finance Corporation (IDFC) would be among the investors in the sovereign wealth fund.
He said the possibility for other potential parties to join the fund was still open.
The UAE government has prepared $6.8 billion to invest in Indonesia's development projects through a sovereign wealth fund, while the IDFC has pledged to invest $5.5 billion in Indonesia. SoftBank Group, meanwhile, has offered up to $40 billion to invest in the development of the country's new capital city. (ydp)