Mirza Adityaswara: SWF We Are Looking For Funds, But Developed Countries Like China Are Even Distributing Funds

Mirza Adityaswara. (Photo: By courtesy)

JAKARTA - President Director of the Indonesian Banking Development Institute (LPPI) Mirza Adityaswara said there are differences between Indonesia's sovereign wealth funds (SWF), namely the Investment Management Institution (LPI), and those owned by developed countries.

In his notes, SWF in Indonesia is different from other countries that have a balance of payments surplus, such as China, Norway, Taiwan, or Singapore.

"They have good international trade. So their SWF channels the excess foreign exchange reserves for investment abroad. But there is another type of SWF that invites foreign capital to build domestically. This is what LPI did, ”he said in a webinar on Thursday, February 25.

For example, the SWF model in Norway is the Norges Fund, which sources its funds from foreign exchange reserves and oil sales. Funds are not included in the state budget but directly go to funds managed by one unit at the central bank invest management.

Mirza added that the existence of the LPI is Indonesia's solution in terms of financing development. This is because national funding is currently being depleted for economic recovery as a result of the impact of the pandemic.

"At the macro level, domestic funding sources are still lacking, only 35 percent of GDP, which is worth Rp. 17,000 trillion," he said.

According to Mirza, foreign funds entering Indonesia are currently spread across various portfolios. For example, through government securities (SBN), as well as global government and private bonds.

"But it needs to be understood that if investors buy expectations, there is a risk of volatility. You can buy easily, foreign investors can sell easily. So we must look for a more stable instrument so that foreign funds can last longer in Indonesia, "he explained.

The presence of SWF Indonesia or LPI, according to Mirza, is an investment instrument solution to fund the development of a number of domestic infrastructure.

"We are optimistic because the LPI board of directors chosen by the president are experienced people at the international level and can attract world-class investors and can maintain SWF governance well," he concluded.