Minister Of Transportation: SWF Is An Opportunity To Accelerate The Development Of Transportation Infrastructure In Indonesia

Minister of Transportation Budi Karya Sumadi (ANTARA)

JAKARTA - Funding for transportation infrastructure development through the Sovereign Wealth Fund (SWF) is expected to accelerate the development of transportation infrastructure in Indonesia. SWF is a funding alternative outside the limited state revenue and expenditure budget (APBN).

Minister of Transportation Budi Karya Sumadi said infrastructure development including transportation is still the government's priority.

However, the financing needs cannot only rely on the state budget. Therefore, alternative infrastructure development funding schemes such as SWF are needed to reduce dependence on the state budget.

Minister of Transportation Budi said that the formation of SWF Indonesia which was named Indonesia Investment Authority (INA) was a tremendous innovation to ensure certainty for investors and prevent misinformation. This results in high investment costs in Indonesia.

"To respond to this opportunity. I ask the ranks of the Ministry of Transportation to get to know and learn more about SWF to support the acceleration of transportation infrastructure development in Indonesia," he said, in a webinar in Jakarta, Wednesday, March 3.

Budi Karya admitted that he already had a long list of projects that could be financed by INA. According to Budi, this series of projects has a big impact on society and has the potential to provide attractive returns. However, the government budget is not sufficient to finance it.

"This is to support the acceleration of strategic development in the transportation sector. The Ministry of Transportation for SWF has prepared a potential project that needs to be built and cannot rely on a pure state budget, "he said.

First, the projects it will offer come from the port transportation sector. Among them are the Garongkong Seaport in South Sulawesi, the Sea Port in Ambon to Palembang.

"Like the Garonggong Port of South Sulawesi, the New Ports in Ambon and Palembang are currently developing FS (feasibility studies) as a solicited project," he said.

Second, originating from air transportation projects, including airports in Fakfak and Manokwari, Papua, airports in Mentawai, West Sumatra to Mandailing Natal, North Sumatra.

"In Aceh, on Banggai Island, Central Sulawesi, on Sabu Raijua Island, NTT, which he said is the most beautiful island in the world, we also build Seaplane in Ambon and Kangean, Weda Airport and Taufiq Kiemas Airport," he said.

Then, the Ministry of Transportation will offer Mass Rapid Transit (MRT) and Light Rail Transit (LRT) projects in Bali, Medan, Bandung, Makassar and Surabaya.

"LRT and MRT in Bali, Medan, Bandung, Makassar, Surabaya. Bus terminals in all major cities," he explained.

SWF is an institution that manages state financial assets or fund managers formed by the government as a state-owned investment vehicle for long-term and low-risk investment purposes in various fields, including real estate and infrastructure.

SWF Indonesia or the Investment Management Institution (LPI) was formed under the name Indonesia Investment Authority (INA) and its board of directors was ratified by the President of the Republic of Indonesia Joko Widodo on February 16, 2021.

INA is the mandate of Law Number 11 of 2020 concerning Job Creation and its derivative regulations such as Government Regulation (PP) Number 74 of 2020 concerning Investment Management Institutions (LPI).

The LPI is an institution that is given a number of special powers (sui geneis) in the context of managing central government investment and aims to increase and optimize the value of investments that are managed in the long term in order to support sustainable development (Article 5 PP 47/2020).

Based on SWF data in the world, there are 5 largest SWFs, namely the Norway Government Pension Fund Global, China Investment Corporation, the Hong Kong Monetary Authority Investment Portfolio, the Abu Dhabi Investment Authority, and the Kuwait Investment Authority.