• The fund, known as the Indonesia Investment Authority, allows investors to place money in sub-funds spanning infrastructure, health care, tourism, technology and the new capital city
• President Joko Widodo is also backing a push to expand Bank Indonesia’s mandate and reiterated plans to build a green economy

President Joko Widodo has set a US$200 billion goal for Indonesia’s new wealth fund in the next two to three years, aiming to fund his push for the resource-driven economy to rise up the value chain.

That is double the US$100 billion target set earlier this year, and a long way from the fund’s US$15 billion start. The fund has been in talks with 50 fund managers and has received pledges from those in the United Arab Emirates, Japan, the US and Canada, which will help it grow to US$20 billion in six months, the president said.

“We can reach this,” Jokowi, as the president is commonly known, said in Jakarta. “We give investors the freedom to choose whether to invest in the entire portfolio or to choose the thematic funds. This is what I think is unique.”

The fund, known as the Indonesia Investment Authority, allows investors to place money in sub-funds spanning infrastructure, health care, tourism, technology and the development of a new national capital city planned on the island of Kalimantan. Indonesia, which has long lagged in attracting foreign direct investment, is banking on the wealth fund to finance long-term development and help Jokowi’s push for the economy to move beyond a reliance on raw resources.

“Foreign Investment Injections To Boost The Hospitality Sector”

Home to the world’s largest nickel reserves, Indonesia is determined to climb up the value chain and become a hub for end-to-end battery-making. It recently set up its own electric vehicle battery holding company and is seeking joint ventures with several global players, including China’s Contemporary Amperex Technology and South Korea’s LG Chem

The government has also pledged to maintain a zero per cent luxury tax rate on electric cars to boost domestic sales and create a more attractive market for investors.

“We want to build a green economy, which produces green products, so that we can move toward green energy,” Jokowi said.

He is calling for investors to take a look at hydropower potential, touting projects on the Kayan River in Kalimantan with 11,000-megawatt maximum output and the Mamberamo River in Papua, which can produce 23,000 megawatts. Geothermal sources can produce 29,000 megawatts, with only 2,000 megawatts tapped, he added.

The president has also been in talks with parties including Tesla about potential investment.

“We’re happy with the progress of the talks. There will be a result,” he said. “The potential is there and this is the economy in the future, with high added values for the country.”

Meanwhile, the president is backing a push to expand Bank Indonesia’s mandate to include bolstering the economy, throwing his public support behind a legislative move that some analysts see as risking the central bank’s independence.

Bank Indonesia should not just manage the currency, but also should support sustainable economic growth and job creation, Jokowi said. After a year when Indonesia struggled with its first recession in two decades, the economy is set to grow as much as 7 per cent in the second quarter compared to a year earlier, he added.

“Of course I support Bank Indonesia to add growth and job creation to its mandate,” he said in a discussion at the presidential palace, where antivirus measures included masks, face shields and clear screens on the table. He added: “Bank Indonesia will remain independent.”

The Covid-19 vaccine programme also takes priority in the president’s mind. Indonesia has vaccinated close to 9.2 million people so far, the most in Southeast Asia, helping rein in new infections from their record levels in January.

The government can expect the programme to slow down in the next few months as supply dwindles due to vaccine nationalism elsewhere, before picking up in July when the country is set to receive as many as 80 million doses a month, Jokowi said. That supply boost will lead cases to drop drastically – a boon for consumer sentiment.

“Manufacturing, factories, industries are already working,” he said. “What hasn’t risen drastically and returned to normal is consumption.”