JAKARTA - The government has finally completed two implementing regulations derived from the Job Creation Law. One of them, Government Regulation no. 74 of 2020 concerning Investment Management Institutions. This regulation regulates the authority of the Investment Management Institution (LPI) or Sovereign Wealth Fund (SWF).
The Coordinating Minister for the Economy Airlangga Hartarto explained that the Investment Management Institution (LPI) functions to manage investment, and aims to increase and optimize the value of investments that are managed in the long term in order to support sustainable development.
"The Investment Management Institution will manage investment funds from abroad and within the country as an alternative source of financing and at the same time reduce dependence on short-term funds," he said, in Jakarta, Thursday, December 17.
The Investment Management Institution is an Indonesian legal entity that is fully owned by the Indonesian government. Through Government Regulation Number 73 of 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 explained.
Airlangga said that this capital support is expected to help the LPI in carrying out its functions and duties, in accordance with the six powers granted.
First, its job is to place funds in financial instruments. Second, carry out asset management activities. Third, LPI must cooperate with other parties, including trust fund entities.
Fourth, the LPI is in charge of determining potential investment partners. Fifth, the LPI is tasked with providing and receiving loans. Sixth, administering assets.
"LPI is expected to have flexibility in investing, professional and independent management, and be able to capture investors' appetite," he said.
The LPI structure is two-tier filled by a combination of government and professionals. The Supervisory Board consisting of the Minister of Finance, the Minister of BUMN, and 3 (three) professionals from the elements, will provide an accountability report to the President.
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.
Airlangga said, through a strong institutional and management structure, LPI will work with partner investors in the commercial sector which is important for development and job creation.
As is known, at the end of November 2020, US DFC has signed a letter of interest to invest US $ 2 billion in LPI. The investment commitment also came from JBIC which has committed to invest 4 billion US dollars.
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