With $140 billion flowing in each year, Australia’s super funds are increasingly looking offshore for investments. Suddenly, Indonesia with 280 million people and a fired-up economy, is on the radar.
Toll roads such as this one in Cikarang, West Java, are being privatised, opening up opportunities for foreign investors.and Singapore, along with Greg Combet from IFM Investors. In Jakarta, they will be focused “principally on having a look at what opportunities there are with the INA”, Jones says.
About 75 cents of every new dollar contributed to Australian superannuation will need to be invested offshore to diversify risk, says Martin Fahy, chief executive of the Association of Superannuation Funds of Australia. “Exploring investment opportunities in our region which deliver returns in the fund members’ best interests is a key part of the Australian funds’ international investment strategy.
“The first step is to establish relationships, to get a level of assurance the INA is what it says it is.”Key to those relationships is INA chief executive Ridha Wirakusumah, who will soon conclude the first of two major transactions for the sovereign wealth fund that will commit capital from Canada, the Netherlands and the United Arab Emirates in toll roads across Sumatra and Java.
Establishing the INA last year was an acknowledgement that Indonesia had some problems it needed to fix. “INA has gained positive perception among foreign investors as its legal mandate looks set to safeguard its governance from political pressure,” said David Sumual, chief economist at Bank Central Asia in Jakarta.
The government has also prepared special tax treatments for INA’s co-investors. Other long-term observers say INA has to demonstrate it can structure transactions so adroitly that foreign investors can overcome their concerns about legal challenges down the line.On Tuesday, Jokowi announced 392 trillion Indonesian rupiah of infrastructure spending next year.
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