Government to Launch Indonesia's Sovereign Wealth Fund

JAKARTA. The government has officially established the Sovereign Wealth Fund (SWF) or it is called Nusantara Investment Authority (NIA), an institution that has special authority to manage funds originating from abroad and within the country. This is a mandate of Law Number 11 on Job Creation.

The provisions regarding NIA are contained in Government Regulation Number (PP) 73 of 2020 on the Initial Capital of Investment Management Institutions and Government Regulation Number 74 of 2020 (PP 74/2020) on Investment Management Institutions.

Coordinating Minister for Economic Affairs Airlangga Hartarto in his written statement said that NIA would manage investment funds from abroad and within the country as an alternative source of financing. The aim is to keep the government from depending on short-term funds.

The investment funds will then be managed so as to increase their added value and can be used to support sustainable development. Here are the six authorities of NIA stipulated in Government Regulation Number 74 of 2020:

• Conducting funds placement in financial instruments;
• Managing assets for investment;
• Cooperating with relevant stakeholders, including trust fund entities;
• Determining potential investment partners;
• Providing and receiving loans;
• Administering assets.

Cooperation with third parties can be done through various forms, such as granting or receiving the power of management, forming joint ventures, or other forms of cooperation. In addition, the NIA can also provide or receive loans in the form of credit facilities, debt securities, or other instruments.

Initial Capital

To perform these functions, the NIA receives support from the government in the form of the initial capital of IDR 15 trillion or around USD 1 billion.

The provision of capital will be carried out through the mechanism of State Capital Injection (PMN) and included in the State Budget (APBN) in 2020.

The initial capital is part of the total capital that will be paid by the government of IDR 75 trillion, the rest of which will be fulfilled through the 2021 State Budget. Thus, the NIA is an institution that is fully owned by the government.