Indonesia is looking to set up a sovereign wealth fund to support local startups and boost economic growth, according to a report by the Financial Times.
The proposed fund is said to be modelled after similar state vehicles established by neighbouring countries Singapore and Malaysia, which takes equities in companies through their state-investment arms Temasek and Khazanah, respectively.
According to the report, citing anonymous sources, Indonesian has yet to decide the size of the fund or the source of its funding but says that the government’s earlier statements had pegged it at up to $10 billion.
The report comes as the Indonesian government is seen to be increasingly active in dialogues with potential investors for the fund. On Monday, Indonesia coordinating maritime affairs minister Luhut Binsar Pandjaitan said Japan Bank for International Cooperation has expressed interest in helping Indonesia establish a sovereign wealth fund for infrastructure development and other investments.
Prior to that in September, Pandjaitan told reporters that he had discussed the idea of an Indonesia sovereign wealth fund with the United Arab Emirates.
The idea to establish a sovereign wealth fund is said to be backed by three related government institutions – the Finance Ministry, the Investment Coordinating Board, and the State-Owned Enterprise Ministry.
Establishing a state investment fund, particularly for tech investments would seem to be a natural progression for Indonesia, which has seen an increasing number of its state-owned firms setting up venture capital arms to ride on the huge wave of tech innovation in the country.
Telco firm Telkom Indonesia was the first to set up a corporate venture capital unit when it launched MDI in 2015, followed by Bank Mandiri with Mandiri Capital Indonesia a year later and fellow lender BRI earlier this year.
Indonesian conglomerates Lippo Group, Sinar Mas and Djarum have also taken the lead in setting up corporate venture capital arms to invest in the tech-led startup action in southeast Asia’s biggest market.
