Indonesia’s sovereign wealth fund signed two agreements on Thursday to invest in toll roads on the islands of Sumatra and Java worth more than 39 trillion rupiah ($2.72 billion), President Joko Widodo said.
The Indonesia Investment Authority (INA) signed a heads of agreement with state construction firm Hutama Karya to invest in three parts of the Trans Sumatra toll road, Finance Minister Sri Mulyani Indrawati, who attended the signing ceremony in Jakarta, said.
INA also signed a confirmation on the start of a transaction with Waskita Toll Road, a unit of another state-owned construction firm, Waskita Karya, for two parts of the Trans Java toll road, she said.
The signings are INA’s first concrete steps since forming a toll road fund last year of up to $3.75 billion, with Caisse de dépôt et placement du Québec, APG Asset Management and a unit of the Abu Dhabi Investment Authority as co-investors.
The signings and INA’s good governance would create greater trust in infrastructure financing in Southeast Asia’s largest economy, from both domestic and international investors, Jokowi, as the president is popularly known, said.
“I think this kind of financing scheme we will continue to develop,” he said. “God willing, bigger investors will come to Indonesia via the INA and not just (investing in) toll roads but also big projects that will affect the economy.”
INA’s chief executive Ridha Wirakusumah said other projects that the fund is considering to invest in this year include sea ports, geothermal and healthcare projects.
The wealth fund’s assets under management amounted to nearly $6 billion, but it aims to grow the figure to between $15 billion to $20 billion within three years supported by help from co-investors, the CEO said last month.
Unlike many other sovereign wealth funds, which manage excess oil revenues or foreign exchange reserves, the INA seeks foreign funds as co-investors to finance the country’s economic development.
- Reuters with additional editing by Sean OMeara