JAKARTA (THE JAKARTA POST/ASIA NEWS NETWORK) - Indonesia will launch its own sovereign wealth fund in January next year as the government seeks to attract more investment and support the economy amid the coronavirus pandemic.
Deputy Minister of State-Owned Enterprises (SOEs) Kartika Wirjoatmodjo said on Tuesday (Oct 20) the government would soon establish the fund to handle government investments.
The establishment of the sovereign wealth fund, which will be called the Indonesia Investment Authority, was included in the controversial Job Creation Law.
"We will launch the Indonesia Investment Authority soon as the Job Creation Law mandates its establishment," he told a virtual discussion but did not go into more details.
The government is preparing 75 trillion rupiah (S$6.9 billion) in capital for the nation's sovereign wealth fund as global heavyweights from the United States to the United Arab Emirates expressed interest to join.
Finance Minister Sri Mulyani Indrawati said 30 trillion rupiah of the capital would be in cash, while the remaining would be in the form of shares in SOEs and other state assets.
The Job Creation Law itself has been met with widespread protests and criticism from labour unions and civil groups over the potentially negative impacts it could have on labour rights and the environment, although the government's goal is to attract investment, boost economic growth and create jobs.
The fund is aimed at attracting 225 trillion rupiah in investment, with the United Arab Emirates, Japanese conglomerate Softbank and the US International Development Finance Corporation (IFDC) already lining up to invest in the fund, officials said previously.
"The establishment of the sovereign wealth fund is aimed at optimising asset value in the long-term as part of the efforts to support sustainable development," the law states.
However, it remains unclear where the wealth fund will be invested, although Dr Sri Mulyani mentioned a combination of development funds and stabilisation funds.
Officials have previously mentioned projects in sectors such as infrastructure, healthcare, energy and resources, tourism and technology.