The Government Disburses IDR 15 Trillion For Investment Management Institutions, The Funds Are From The State Budget

JAKARTA - The government has provided an injection of funds for the Investment Management Institution (LPI) of IDR 15 trillion or the equivalent of around 1 billion US dollars. The funds are in accordance with the mandate conveyed in Government Regulation Number 73 of 2020 which was recently issued by the government.

Coordinating Minister for Economic Affairs (Menko Ekonomi) Airlangga Hartarto said LPI is an Indonesian legal entity wholly owned by the Indonesian government.

The LPI functions to manage investment and aims to increase and optimize the investment value that is managed in the long term in order to support sustainable development.

"Through Government Regulation 73/2020, LPI received initial capital support of IDR 15 trillion, equivalent to around 1 billion US dollars. The government will provide support in the form of initial capital participation from the 2020 State Budget in accordance with applicable regulations," he said in Jakarta, Thursday , December 17th.

The fulfillment of LPI capital will gradually be carried out until it reaches IDR 75 trillion or the equivalent of US $ 5 billion in 2021, as stated in Government Regulation Number 74 of 2020.

This capital support is expected to assist LPI in carrying out its functions and duties, in accordance with the six powers given, namely placing funds in financial instruments, carrying out asset management activities.

In addition, cooperating with other parties, including trust fund entities, determining potential investment partners, providing and receiving loans, administering assets.

"The LPI is expected to have flexibility in investing, professional and independent management, and be able to capture investors' appetite," he said.

Airlangga said the LPI structure was two-tier filled by a combination of government and professionals. The Supervisory Board consisting of the Minister of Finance, Minister of BUMN, and three professionals from the elements, will provide an accountability report to President Joko Widodo (Jokowi).

Meanwhile, the Board of Directors consisting of five people from the professional element will provide the Annual Report and Accountability Report to the Supervisory Board.

Through a strong institutional and management structure, LPI will work closely with partner investors in the commercial sector which is important for development and job creation.

For your information, to note, the government has completed two implementing regulations derived from the Job Creation Law. The two regulations were officially signed by President Jokowi.

The two regulations are Government Regulation (PP) Number 73 of 2020 concerning Initial Capital for Investment Management Institutions and PP Number 74 of 2020 concerning Investment Management Institutions. Both are implementing regulations for Law Number 11 of 2020 concerning Job Creation, especially in the investment sector.

"These two government regulations aim to answer structural challenges from the investment side where domestic financing capacity is not sufficient to finance future economic development," said Airlangga.

Apart from that, he said, the government also needs a strong strategic partner legally and institutionally to attract investment from global investors.