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Jakarta, CNBC Indonesia – The Coordinating Minister of Economic Affairs, Airlangga Hartarto, revealed that President Joko Widodo (Jokowi) has already appointed the state endowment fund o sovereign wealth fund (SWF) that will be formed by the government as mandated by the Law Omnibus Law Cipta Kerja (Ciptaker).
The Ciptaker Act has been ratified by the Plenary Session in the DPR on Monday this week (10/5/2020) and establishes that there will be a government-owned Investment Management Institution (LPI), also known as SWF, with a initial capital of IDR 15 trillion.
“The name proposed by the president is the Indonesian Investment Authority,” Airlangga said on CNBC Indonesia TV’s Squawk Box on Thursday (8/10/2020).
“The Indonesian Investment Authority will have a capital of up to 75 trillion rupees and this leverage will invite SWF from other countries,” he explained.
He said it was counterpart fund worth US $ 5 billion or the equivalent of Rs 75 trillion (exchange rate of Rs 14,900 / US dollars), of course, SWF Indonesia is expected to attract other investors.
Therefore, Indonesia has the tools to encourage investors, not only from foreign direct investment (FDI), not only through the Investment Coordinating Board (BKPM), but also through the Indonesian Investment Authority .
“Like other countries, Malaysia has Khazanah, Singapore has GIC and Temasek, as well as several countries have SWF. Therefore, investment instruments in Indonesia are more comprehensive,” said the former president of the Indonesian Listed Companies Association.
Earlier, Finance Minister Sri Mulyani Indrawati emphasized that it was not a dream for Indonesia to be able to generate an investment fund of IDR 225 billion, which would be generated from SWF.
The minister explained that the initial capital for the formation of the SWF will reach 75 trillion rupees. The seed capital will come from a combination of state assets, state enterprise assets (BUMN) and other sources.
On more rules on the operation and formation of sovereign wealth funds, he said that Sri Mulyani will be regulated more in the Government Regulation (PP).
“In the PP, we are going to regulate this LPI with the equity participation specified in the PP consisting of shares in cash funds, BUMN shares, in which we expect the value to reach 75 trillion IDR,” Sri Mulyani explained in press conference this Wednesday. (10/7/2020).
In the early stages, Sri Mulyani said, the equity fund may be formed in the form of cash worth Rs 30 trillion.
In this initial stage of capital, it will come from state-owned assets (BMN), shares of state-owned companies, and state accounts receivable.
“Now it has been discussed is the injection of capital in the form of cash, whose value reaches up to Rp 30 billion,” he said.
With capital that could reach 75 trillion rupees, the government hopes to triple investment funds or reach 225 trillion rupees.
According to Sri Mulyani, the SWF model will be combined with development fund Y stabilization fund, which would generate international SWFs like Singapore’s Temasek, Abu Dhabi SWF, etc.
As an institutional structure, the SWF will consist of a Supervisory Board and a Board of Directors, where the Supervisory Board will be made up of the Minister of Finance, the Minister of BUMN and 3 people from professional circles.
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