Indonesia’s New Sovereign Wealth Fund: When Strategic Development Converges with Stabilization

Abstract

Indonesia’s latest attempt to reintroduce an investment management agency emerged as the government undertook a significant overhaul of its investment strategy in providing a vehicle to accommodate foreign investment. While the agency had been categorically set as a hybrid model of a stabilization fund as well as a strategic development fund, the interplay between these two objectives remains to be seen by virtue of implementing the agency’s mandate stated in the Job Creation law and its implementing regulations. As the fund has been slated to receive large sums to cater to the ambitious government-led initiative, there is a heightened urgency to dissect the investment management policies that the agency will adopt to achieve its goals and sustain its presence. Upon reference to similar entities in other jurisdictions and the commonly adopted governance principles for sovereign wealth funds, this paper has found that the Indonesian government’s reforms should adhere to those that have been internationally embraced, while adjusting them to the relevant circumstances that the Indonesian agency is geared to achieve.

Sovereign Wealth Fund Development in Indonesia: Lessons Learned from Norway and Singapore

“…15 of 2006 on the Audit Board of the Republic of Indonesia was passed to set forth the responsibilities and powers of BPK. Our suggestion echoed a previous study on INA, which suggested that BPK's participation in analysing INA's financial reports is justified given the volume of investment flows involved(Pink, 2020;Halim, 2021). In this case, we assert that if 110 110Yustisia Volume 13 Number 1 (April 2024) Sovereign Wealth Fund Development in...…”

“…Indonesia's SWF differs from Norway's and Singapore's inward-looking approach, focusing on government co-investment with private investors in Indonesia-based projects (Habir, 2021). The idea of SWF was established in 2007 through the Government Innovation Center but was eventually liquidated in 2015 because of the limited amount of Indonesia's reserves (Febriyanta, 2021).…”