Indonesia Investment Authority (INA) has shown a strong performance in its maiden year of operation, securing around IDR300 trillion in investment commitments for 2021 in transportation, logistics, maritime, and digital infrastructure.
“The investment commitments are outlined in 11 investment agreements, four heads of agreement, and 16 letters of intent/non-binding offers,” said INA spokeswoman Masyita Crystallin told Indonesia Business Post on May 20, 2022.
INA is also involved in several investment processes in the health care sector and is actively engaged in a discussion about energy transition mechanisms.
Established in 2021, the Indonesian government tasked INA, the country’s sovereign wealth fund, to diversify the economy into a new asset class. INA aims to create wealth for future generations through its fund and contribute to Indonesia’s sustainable development. As an adviser, partner, broker, and asset manager, INA strives to materialize sustainable development in Indonesia and create wealth for future generations.
Capital injection
The government injected IDR75 trillion to INA, consisting of IDR15 trillion in cash deposited in February 2021 and another IDR15 trillion deposited in November 2021. The government’s transfer of shares of two state-owned enterprises took place in December 2021, amounting IDR45 trillion.
INA co-invests with strategic partners in sectors that promise exponential growth in Indonesia, recovery from the COVID-19 pandemic, and optimal investment returns to investors. The authority elects to invest as an equity partner for long-term investment.
INA plans to focus on several sectors in 2022, including airports, seaports, toll roads, cargo terminals, and container ports. Digital infrastructure includes digital platforms and services, data centers, telecommunication towers, fiber optic, and broadband services are also included in the list. INA also focuses on health care, renewable energy, and waste management.
Investments of this kind are intended to provide a return on investment commensurate with their risk. Each asset has a different return target based on its risk profile.
“Accordingly, we invest in sectors with high growth potential due to Indonesia’s unique characteristics, such as its demography, natural resources, rapid adoption of technology, low penetration of various sectors, urbanization, and consumer behavior,” Crystallin said.
Domestic focus
Although INA can invest in domestic and foreign projects, it currently focuses on projects in Indonesia. INA continues to seek funding from global partners for the projects in the short term. As a result, Crystallin said, “We do not exclude investments in foreign projects as long as they contribute to Indonesia’s prosperity and increase its competitiveness.”
By 2021, there are estimated to be Rp 75 trillion in assets under INA’s management, and it hopes the number will double. After INA and the project owner have completed a due diligence process, all funds, including those from strategic partners and government capital injections, will be directed to the respective projects.
INA has executed investment in Indonesia’s largest telecom tower company, PT Dayamitra Telekomunikasi Tbk (Mitratel), through an IPO for US$770 million in cooperation with its partner. Mitratel launched its Initial Public Offering (IPO) in November 2021.
Infrastructure
INA also secured the opportunity to explore investments in several strategic port locations in Indonesia, with Dubai Port (DP) World – a Dubai-based multinational logistic company – as its most significant operator. INA and DP World have signed a strategic alliance agreement that represents an investment commitment of US$7.5 billion.
In addition, INA has also established an investment platform in toll road projects worth US$3.75 billion, which involves an international consortium of investors, including the Caisse de depot et placement du Quebec (CDPQ) of Canada, APG Asset Management (APG) of the Netherlands, and Abu Dhabi Investment Authority (ADIA) of the United Arab Emirates.
INA has reviewed 35 toll road assets in cooperation with the consortium, including the Trans Sumatra and Trans Java toll roads.
“The project’s goal is to create multiplier effects for economic growth in Sumatra and Java islands,” Crystallin said.
INA also signed an agreement worth US$10 billion with the Abu Dhabi Growth Fund (ADG), which was established to support the United Arab Emirates. ADG and INA have developed a partnership that has enabled them to cooperate on various high-return investment projects.
