23 Feb 2021
Indonesias New State Investment Fund Likely to Be Up and Running Soon


The Indonesian Government is pushing ahead quickly with its plans to bridge the gaps in existing infrastructure financing sources through the setting up of a new state investment fund known as the Indonesia Investment Authority (abbreviated in Bahasa Indonesia as “INA”). The fund, whose establishment is mandated by Government Regulation No. 74 of 2020 (“Regulation 74”) on the Indonesia Investment Authority, has an initial capital of IDR 75 trillion (approx. USD 5.6 billion).


INA is regularly referred to as a “sovereign wealth fund” by the media. Indeed, the Government’s own publicity mentions it in the same breath of such well-known sovereign wealth funds as those operated by Singapore, Norway, Kuwait, UAE and Qatar. However, this is rather misleading as INA will not be funded by the country’s reserves, but rather by initial state-capital funding, with additional capital to be raised from international investors.


On 16 February 2021, the President appointed the five members of INA’s Board of Directors, including well-known Indonesian banker Ridha Wirakusumah as chief executive officer. The majority of the directors have backgrounds in the private sector, which will no doubt reassure potential international investors. Three members of INA’s supervisory board have also been appointed, together with the Minister of Finance as chair of the Supervisory Board and the State Enterprises Minister as ex officio board member. We expect that INA will be officially inaugurated as soon as it is ready to commence commercial operations.


According to Regulation 74, INA has a wide remit to manage assets, ranging from direct state investments, returns on investments, and assets of state-owned enterprises, to grants and other legitimate funding sources, such as debt, loans, bonds and other credit facilities. Its remit includes fund placement, selection of investment partners, borrowing procurement and so forth.


Regulation 74 further provides that INA will be permitted to establish or participate in funds for asset management with third parties. To increase its bankability, INA may pledge its assets as collateral for borrowings and guarantee the borrowings of joint ventures in which it might participate. It will be required to allocate 10% of its profits as a mandatory reserve and retained earnings, with the surplus being distributed to the government.


In addition, Regulation 74 stipulates that INA may not be declared bankrupt except where it is found to be bankrupt based upon what is termed an “insolvency test” conducted by an independent body appointed by the Ministry of Finance.


ABNR Commentary


Unlike other state-sponsored financiers, such as PT Sarana Multi Infrastruktur (SMI) and PT Indonesia Infrastructure Fund (IIF), INA is a state-sponsored special entity, which means it will be able to operate more flexibly and responsively. It is expected that it will complement the infrastructure financing efforts of SMI and IIF, and the country’s state-owned enterprises.


While media reports on the extent of the funding pledges by foreign investors thus far vary wildly, according to some estimates up to USD 15 billion has already been promised, which figure could grow to as much as USD 100 billion. Of course, the fact that money has been promised does not mean that it will actually be forthcoming. So, the Government could still face challenges in realizing the promised investments. Overall, therefore, much still remains to be done and at this stage it is too early to assess the fund’s prospects of success. However, we view the establishment of INA as a positive initiative on the part of the Government and one that is deserving of praise.


By partners Mr. Ayik Candrawulan Gunadi ( and Mr. Nurdin Adiwibowo ( and senior associate Mr. Mochamad Riandi (  


This ABNR News and its contents are intended solely to provide a general overview, for informational purposes, of selected recent developments in Indonesian law. They do not constitute legal advice and should not be relied upon as such. Accordingly, ABNR accepts no liability of any kind in respect of any statement, opinion, view, error, or omission that may be contained in this legal update. In all circumstances, you are strongly advised to consult a licensed Indonesian legal practitioner before taking any action that could adversely affect your rights and obligations under Indonesian law.