LPI Aims For US $ 2 Billion Investment Fund This Year?

Member of the Supervisory Board of the LPI Darwin Cyril Noerhadi (Photo: Capture the LPPI screen)

JAKARTA - The government, through the Investment Management Institute (LPI) called the Indonesia Investment Authority (INA), said that this institution is expected to absorb an investment of US $ 2 billion in the near future.

This assumption was made by the Member of the Supervisory Board of the LPI Darwin Cyril Noerhadi. According to him, with the fresh funds the government was helped to create jobs for 36,000 people.

"If in the second quarter of 2021 it can be realized, say 2 billion US dollars, then the LPI can contribute to economic growth by 1.08 percent per year," he said in a webinar, Thursday, February 25.

Darwin added that the target was expected to help the country continue infrastructure development in the country, which had stalled due to the impact of the pandemic.

"So we don't just keep relying on the state budget. This is where the LPI plays an important role in finding alternative sources of funding, but not with debt but with investment mechanisms, "he said.

Meanwhile, several strategic projects that can be managed with partner investors include toll road infrastructure, airports and seaports.

"LPI can also be the answer to infrastructure funding questions so far," he added.

Previously, Minister of Finance (Menkeu) Sri Mulyani revealed that the reform of the law summarized in the omnibus law had a positive impact in creating the investment climate in Indonesia.

One of the important results noted was the formation of an Investment Management Institution (LPI) called the Indonesia Investment Authority or abbreviated as INA.

"Why did we create this institution? Because Indonesia cannot continue building a number of infrastructures if it only relies on funding from the state budget, "he said in an online seminar at the LPEM UI last week.

Minister of Finance added, LPI opens wide opportunities for the government to obtain capital through more efficient means.

"We consider that there must be instruments and institutions that can seize opportunities for foreign capital management from different ways to balance the state budget," he said.

The effort to form a sovereign wealth funds (SWF) type institution is a complement to funding schemes collected from the public, such as an initial public offering (IPO).

"There is a way with an IPO, but that is not sufficient. So this SWF is one of the government's efforts to attract more capital from abroad to cooperate with us in a balanced manner to finance infrastructure, "he explained.

To note, the government formed the LPI by injecting an initial capital of IDR 15 trillion from the total planned capital of IDR 75 trillion. In this capital support scheme, a mechanism for the participation of State-Owned Enterprises (BUMN) and BMN shares is also embedded in order to smooth out LPI's business activities.

Later, the state assets mandated by the LPI can be delegated to a joint venture company (investor) where the LPI maintains its position as the main determinant in terms of business policy and determinants in decision making.