Indonesia Investment Authority (INA), an endowment management institution, stated that it allocated 20% of its total investment allocation to the new renewable energy (EBT) sector.
Ridha DM Wirakusumah, President Director of INA, said that the allocation is equivalent to IDR 28 trillion of the total investment funds currently managed reaching IDR 140 trillion.
The companies targeted for investment by INA are geothermal power generating companies, electric vehicle battery (EV battery) manufacturing companies, and the PLTU energy transition project in Cirebon.
“The latest is in businesses related to forest preservation or nature-based solutions, we have signed a memorandum of understanding,” said Ridha, on November 1, 2023.
Ridha said that currently INA’s investment portfolio is divided into four large clusters. The first is in the infrastructure sector such as toll roads, ports and airports. Next is investment in the digital sector, health and finally in the new renewable energy business.
As is known, investment in the EBT business in Indonesia is still lower than in the oil and gas and coal mineral sectors. According to data from the Ministry of Energy and Mineral Resources (ESDM), total investment in the EBT sector since 2020 has not moved from the level of US$ 1.6 billion. This is far compared to coal investment which reached US$ 5.6 billion and oil and gas investment of US$ 13.9 billion.
Meanwhile, to encourage the acceleration of Indonesia’s energy transition, at least US$ 17.4 billion in investment per year is required.
“The difficulty of funding for the energy transition is a challenge for the whole world, not only experienced by Indonesia,” said Ridha.
Even so, Ridha said he would continue to explore investment in all potential sectors. In the infrastructure sector, for example, this year the company has acquired 2 toll roads belonging to PT Hutama Karya (HK), namely the Medan-Binjai (MB) and Bakauheni-Terbanggi Besar (BTB) sections with a length of 157 kilometers (km) worth IDR 20.5 trillion.
He also said that there were still other new toll roads that had the potential to become INA’s investment portfolio.
“Opportunities are on our toll roads, digital and health are also coming. Soon we will announce it, don’t ask me what sector it is. “We’ll wait for the playing date,” he said.
As is known, since two years of its founding, INA has now invested more than IDR 50 trillion. Even though it has assets under management of more than IDR 140 trillion (US$ 9 billion), Ridha believes that when compared with Indonesia’s total gross domestic product (GDP), which has reached US$ 1,300 billion, it is still relatively small.
As a comparison, Singapore, whose gross GDP value is two-thirds of Indonesia’s or the equivalent of US$ 400 billion, invests its funds in SWF owned by the Singapore government, GIC US$ 700 billion and Temasek US$ 300 billion.
“From IDR 75 trillion in initial government investment to INA (US$ 5 billion), it has now increased to IDR 140 trillion, which is still far from Temasek and GIC,” he said.