Sovereign Wealth Funds and Foreign Pensions Have Mostly Avoided Indonesian Infrastructure
By analyzing direct investments by sovereign wealth funds and overseas public pensions,
most direct investments in Indonesia
went toward materials, consumer tech, and banking.These sovereign investors preferred
the natural resource plays before 2016,
switching to banking in 2017,and then making large plays in consumer tech companies like Tokopedia, e-commerce firm Bukalapak, and others.
The consumer tech play
is attractive in Indonesia as it ranks the fourth most populous country in the world, while consisting of 34 provinces and 16,056 islands.
Indonesia has a large consumer base with fast-increasing spending power. In 2020,
according to SWFI data, sovereign funds and foreign public pension
directly invested US$ 535 million in Indonesia versus US$ 887.5 million in 2019.
Norway Government Pension Fund Global
In 2019, made an investment in PT Perusahaan Gas Negara Tbk.
Very little capital went toward Indonesian infrastructure.
Canada Pension Plan Investment Board (CPP Investments)
There are some exceptions.
In 2019, made its first infrastructure investment in Indonesia with the acquisition of a 45% interest in PT Lintas Marga Sedaya (LMS), the concession holder and operator of the Cikopo-Palimanan (Cipali) toll road.This is probably good reason why the Indonesian government is pressing on with its sovereign wealth fund – Nusantara Investment Authority.
The Indonesian sovereign wealth fund
is more like a strategic development SWF (SDSWF), and will act as a catalyst to lure foreign investors like other SWFs and public pensions into Indonesian infrastructure.
The Indonesian government
is funding the wealth fund vehicle through the state budget and state assets.
SWFI