Indonesia president says new sovereign fund targeting $20 billion within a few months

JAKARTA (Reuters) - Indonesia’s soon-to-be launched sovereign wealth fund (SWF) is targeting $20 billion in investment in the next few months, President Joko Widodo said, a larger sum than previously announced after positive responses from several firms.

Southeast Asia’s largest economy hopes to launch the SWF early this year to attract funds to help it get out of its pandemic-induced recession as well as finance an ambitious infrastructure drive and a massive capital relocation project.

Unlike many SWFs set up by wealthy countries to save oil revenues or foreign exchange reserves, the Indonesian fund - like others in emerging markets - is designed to attract foreign firms as co-investors.

“I asked my finance minister, the target that comes into our sovereign wealth fund,” Widodo, widely known by his nickname Jokowi in Indonesia, told an annual meeting with financial players hosted by the Financial Services Authority.

“She answered, around $20 billion,” he added.

Finance Minister Sri Mulyani Indrawati previously said Jakarta would seed the SWF with $5 billion in cash and shares in state companies, with an aim to grow the fund to $15 billion by inviting foreign investors.

Authorities have promoted the SWF to several countries, including to private equity firms, and have announced billions of dollars in investment interest from the U.S. International Development Finance Corporation, the Japan Bank for International Cooperation, as well as the Canada Pension Plan Investment Board.

Jokowi told the forum he had submitted names for the fund’s supervisory board members to parliament, hoping the selection process could be completed by next week.

However, he has not announced who would run the fund, which is under scrutiny by investors wary of potential mismanagement after the industrial-scale corruption and massive losses involving neighbouring Malaysia’s 1MDB fund.

The president did not provide a timeline for the SWF launch.

Reporting by Maikel Jefriando and Tabita Diela; Writing by Gayatri Suroyo; Editing by Mark Heinrich