Illustrative image (Photo: Internet) Jakarta (VNA) - The Indonesian government is preparing 75 trillion Rp (5.1 billion USD)for the nation’s sovereign wealth fund (SWF) to attract investment and supportthe economy as global heavyweights from the United States to the United ArabEmirates have expressed interest to join.
The Jakarta Post quoted Indonesian Finance Minister Sri Mulyani Indrawati assaying that 30 trillion Rp of the sum would be in cash, while the remainingwould be in the form of state-owned enterprises (SOEs) shares and other stateassets.
The fund is aimed at attracting 225 trillion Rp in investment, with foreignfunds from the United Arab Emirates, Japanese conglomerate Softbank and the USInternational Development Finance Corporation (IFDC) already lining up toinvest in the fund, officials said previously.
The establishment of the sovereign wealth fund, which will be called theIndonesia Investment Authority, is included in the Job Creation Law. The lawhas met with widespread protests and criticism from labor unions and civilgroups over the potentially negative impact it could have on labor rights andthe environment, although the government’s goal is to attract investment, boosteconomic growth and create jobs.
The fund will have a supervisory council led by the finance minister, withmembers including the SOEs minister and three more professionals, according tothe law. The board of directors will include five professionals to oversee thefund’s operation, including to formulate the fund’s policy and work plan, amongother things.
The Indonesian government can inject more money into the fund should itscapital decline significantly, the law states. Indonesia would follow Russia’ssovereign wealth fund model as it would raise the required funds from privateinvestors instead of from the country’s reserve funds, Deputy SOEs MinisterKartika “Tiko” Wirjoatmodjo said earlier this year.
According to Permata Bank economist Josua Pardede, although the fund could actas alternative financing sources to boost economic growth, the government mustensure that the fund should be transparent and independent.
“Both the supervisory council and board of directors must be independent,transparent and far from political interest to mitigate the risk of corruption.As the fund will manage a significant amount of assets, prudent management is thekey to avoid potential state losses,” he said./.
The Jakarta Post quoted Indonesian Finance Minister Sri Mulyani Indrawati assaying that 30 trillion Rp of the sum would be in cash, while the remainingwould be in the form of state-owned enterprises (SOEs) shares and other stateassets.
The fund is aimed at attracting 225 trillion Rp in investment, with foreignfunds from the United Arab Emirates, Japanese conglomerate Softbank and the USInternational Development Finance Corporation (IFDC) already lining up toinvest in the fund, officials said previously.
The establishment of the sovereign wealth fund, which will be called theIndonesia Investment Authority, is included in the Job Creation Law. The lawhas met with widespread protests and criticism from labor unions and civilgroups over the potentially negative impact it could have on labor rights andthe environment, although the government’s goal is to attract investment, boosteconomic growth and create jobs.
The fund will have a supervisory council led by the finance minister, withmembers including the SOEs minister and three more professionals, according tothe law. The board of directors will include five professionals to oversee thefund’s operation, including to formulate the fund’s policy and work plan, amongother things.
The Indonesian government can inject more money into the fund should itscapital decline significantly, the law states. Indonesia would follow Russia’ssovereign wealth fund model as it would raise the required funds from privateinvestors instead of from the country’s reserve funds, Deputy SOEs MinisterKartika “Tiko” Wirjoatmodjo said earlier this year.
According to Permata Bank economist Josua Pardede, although the fund could actas alternative financing sources to boost economic growth, the government mustensure that the fund should be transparent and independent.
“Both the supervisory council and board of directors must be independent,transparent and far from political interest to mitigate the risk of corruption.As the fund will manage a significant amount of assets, prudent management is thekey to avoid potential state losses,” he said./.
VNA
