(ATF) Indonesian President Joko Widodo has picked a senior banker as head of the country’s new sovereign wealth fund, which has been set up to help fund infrastructure projects.
The Indonesia Investment Authority (INA) will be headed by former Bank Permata chief executive Ridha Wirakusumah. The wealth fund has $5 billion in initial funding from the government and expects to raise two to three times that amount in the mid to near-future.
There has been scrutiny over the governance of INA in the wake of the enormous corruption scandal and massive losses involving neighbouring Malaysia’s 1MDB fund.
The President, usually known as Jokowi, attempted to reassure citizens about the integrity of the new fund and said its top executives had been picked by a selection committee and professional head-hunters.
“The INA is a professional institution, protected by the law and will use professional judgment in its work,” he said in his introductory remarks.
He described the wealth fund’s board of directors as “the nation’s best sons and daughters who are experienced in the international professional arena”.
Mr Arief Budiman, former chief financial officer of state energy firm Pertamina, has been named deputy chief executive while Mr Stefanus Ade Hadiwidjaja, managing director of private equity firm Creador, as the chief investment officer.
Other directors are Ms Marita Alisjahbana, risk manager at Citi Indonesia and Eddy Porwanto of private equity firm Northstar Pacific.
Finance Minister Sri Mulyani Indrawati, who heads INA’s supervisory council, told a news conference that the president said the fund must be managed to avoid the fate of 1MDB.
US-educated Wirakusumah has spent over 30 years in banking and investment, including with private equity group KKR & Co, American International Group and Citibank.
“We will strictly and clearly carry out our duties with the highest integrity,” Wirakusumah said.
Toll roads, new capital on Borneo
The fund has already earmarked some infrastructure projects to invest in and its first focus will be toll roads.
“There is some $9.5 billion in our pipeline that we will look through to measure what will bring good returns for us,” Wirakusumah said.
Officials have previously said INA could also fund Jokowi’s project to move the capital of Southeast Asia’s largest economy to Borneo island from Jakarta.
“The team has a strong background. This should be responded to positively by the market,” Nico Laurens, head of research at brokerage Panin Sekuritas, was quoted as telling Reuters.
The fund has faced scepticism because foreign co-investors will have to contribute a major share of investment, while Indonesia also has struggled to stamp out rampant graft and ensure legal certainty.
Indonesian officials previously said bodies like the US International Development Finance Corporation, Japan Bank for International Cooperation, Singapore’s sovereign wealth fund GIC and some pension funds had expressed interest in investing in the INA, with total commitments reaching up to $10 billion.
Sri Mulyani said several sovereign wealth funds had written to her directly expressing interest in investing.
With reporting by Reuters
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