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JAKARTA: The UAE has announced that it is exploring investment options for infrastructure development projects in Indonesia before injecting more financial support through the sovereign wealth fund recently launched by the Southeast Asian country.
As part of the recent Indonesia-Emirati Amazing Week tour of four cities, UAE Minister of Energy and Infrastructure Suhail Al-Mazrouei and his delegation signed several trade agreements, including a promise to develop a 500 million euro resort. dollars on an island in Aceh province and a $ 1.2 billion Industrial Zone and Port Development Plan in Gresik, East Java province.
“When we met two years ago, no one was looking at these projects, now we are signing some of these projects,” the minister said, referring to Crown Prince Sheikh Mohammed bin Zayed Al-Nahyan’s visit to Indonesia in July 2019, the first as leader of the United Arab Emirates since the crown prince’s father visited the country in 1990.
Some of the other deals that received the green light last week included a follow-up to the $ 22.9 billion investment deals signed during Indonesian President Joko Widodo’s visit to Abu Dhabi in January last year to develop the energy sectors. , infrastructure and mining, which will be channeled through the sovereign investment fund.
In a joint press conference with his Indonesian counterpart, Maritime Affairs and Investment Coordinating Minister Luhut Pandjaitan, Al-Mazrouei said the UAE was interested in seeking assets for infrastructure development projects that Indonesia was offering through of the new fund agency that Abu Dhabi Investment Authority helped establish, where he also serves as an advisor, and evaluate them before securing investments.
However, he stopped short of disclosing a number, noting that the UAE’s commitment to Indonesia was “more than a number.”
The minister said: The fact that we work together in the creation of the sovereign wealth fund commits us to analyze it. We will continue to work with and support Indonesia, and this is the nature of our investments in all countries. ” Al-Mazrouei added that the UAE had promised Widodo that he would be “a good and sincere adviser.”
“Indonesia is a major economy and the largest Islamic economy. It is a vibrant economy with a very healthy growth rate. I think a lot can happen in Indonesia, so let’s not limit ourselves to a number, “he said.
The Indonesian Investment Authority was launched in February, and the government has committed to injecting up to $ 5.3 billion in seed capital by the end of the year.
One of its priorities is to develop infrastructure projects that offer more access and connectivity in the vast Indonesian archipelago, such as toll roads, airports and seaports. Pandjaitan said the agency, which was aiming to develop a $ 20 billion seed fund, had established a master fund and thematic funds through which foreign investors could inject capital, adding that it was raising around 9.5 billion dollars from investors since its inception.
In early January, Indonesia’s chief economy minister Airlangga Hartarto said that the United States’ International Development Finance Corporation (IDFC) and Japan’s Bank for International Cooperation (JBIC) had expressed interest in injecting $ 2 billion and $ 4 billion, respectively, in the master. fund, while Canada’s global investment group CDPQ and Dutch investment company APG were also interested in committing up to $ 2 billion and $ 1.5 billion each in thematic funds.
Singapore’s sovereign wealth fund agency GIC has also reached out, though no figures have been released yet.
According to data from the Indonesian Investment Coordinating Board, Singapore ranked first on the list of foreign direct investment (FDI) in Indonesia last year, accounting for 34.1 percent of total FDI, with projects worth 9,800. millions of dollars.
Toto Pranoto, an economist at the University of Indonesia’s business and economics school, told Arab News on Monday that the establishment of the INA could bridge the gap between the funds needed for development projects and Indonesia’s domestic financing capacity.
It would also ease some pressure on state infrastructure development companies, which had been struggling to inject funds into projects by issuing global bonds due to limited funding from the state budget, he said.
“The financial capital obtained from the sovereign wealth fund would help improve its cash flows,” added Pranoto. He noted that the INA could serve as a catalyst to attract foreign investors to inject financing into projects that could generate good returns for them.
