Indonesia attracted about $3.9 billion in investments from state-owned investors such as sovereign wealth funds (SWFs) and public pension funds in 2022, according to an estimate by research consultancy Global SWF.
Investors included Singapore’s Temasek, Abu Dhabi Investment Authority, Malaysia’s Khazanah and China’s CIC among others.
Indonesia’s own strategic SWF, Indonesia Investment Authority, or INA, also drove investments, particularly in infrastructure and green energy transition. That trend is expected to continue in 2023.
“We expect them [INA] to keep focusing on traditional infrastructure and clean energy but also other key sectors including healthcare, financial services, consumer, and tech,” said Diego Lopez, managing director of Global SWF and co-author of the annual report 2023 on state-owned investors released on January 1.
“Given INA's aggressive marketing strategy, I would not be surprised if they secured new investors including Canadian pensions, Middle East sovereign wealth funds or Australian super funds,” he said.
INA is part of a new breed of “catalytic funds”, established with the aim of attracting foreign capital into the country, rather than investing national capital overseas.
The Indonesian government has been marketing INA very aggressively and has reportedly reached out to more than 100 different parties including sovereign wealth funds and public pension funds since it launched in February 2021, according to the Global SWF report.
With a population of 260 million, Indonesia is a rapidly developing market few investors can ignore. Annual economic growth is projected to be above 5% in 2022.
Robust private consumption, rising investment and double-digit export growth have supported the country’s ongoing development, the report noted.
INA, in particular, ramped up its efforts to bring in partners to help with clean energy transition in 2022.
The SWF in November said it will set up a green or electric vehicle (EV) fund of at least $2 billion with China’s battery maker CATL and Hong Kong-based financial services firm CMB International. The initial focus of the funding is likely to be nickel mining and battery development.
“Indonesia is blessed and fortunate with an abundance of nickel reserves, but at the end of the day it is only a small part of the EV ecosystem,” Masyita Crystallin, a spokesperson for INA, told AsianInvestor recently. “Our aim is the development of a sustainable end-to-end ecosystem for EVs.”
INA also aggressively pursued investments in healthcare and cleantech.
It inked a deal in December with the Danish government’s Investment Fund for Developing Countries (IFU) to co-invest up to $500 million in renewable energy, water, waste management and other sustainable opportunities.
IFU will continue to make new investments in Asia, including Indonesia, an IFU spokesperson told AsianInvestor. “That is the ambition with the new agreement with INA,” the spokeperson said.
IFU has invested in Indonesia before, although in recent years it had not made new investments until the December 2022 announcement.
“Asia is one of IFU’s main investment areas and in total the fund has historically made more than 400 investments in the region, especially in India, Vietnam and Thailand,” the spokesperson said.
The Danish fund invests in four sectors – green energy, infrastructure, financial services, healthcare and sustainable food systems.
“IFU make direct investments in individual companies providing risk capital in the form of equity and loans. Additional partners can be private companies, funds and institutional investors,” the spokesperson added.
The agreement with the Danish fund followed the $2.8 billion investment framework agreement signed in July between INA and China's Silk Road Fund, which is backed by China Investment Corporation and SAFE.
Its first deals came in November with the partners investing $120 million in listed pharma company PT Kimia Farma Tbk and its PT Kimia Farma Apotek unit.
INA also dipped its toe into e-commerce, by joining Blackrock and others in backing a $300 million finance facility for online travel agent Traveloka in September.