Indonesia has joined the party. For many years something of a local outlier in lacking a sovereign wealth fund, while neighbours Singapore and Malaysia built their own with great success, the 270 million-strong country has finally launched one: the Indonesian Investment Authority.
It’s a surprise that commodity-rich Indonesia, which is no longer an oil and gas exporter but has plenty other natural bounties from its forests to its seas, has gone so long without this most prudent and fashionable of tools. And it’s striking that when you ask why Indonesia needs a sovereign wealth fund, the people closest to the subject tend to say: ‘Well, it’s about time.’
“It is long overdue,” says Sri Mulyani Indrawati, Indonesia’s minister of finance, who is also chair of the supervisory committee for the new fund.
“In the 1970s when Indonesia had a very big surplus in oil and gas, we didn’t establish a sovereign wealth fund.
“That doesn’t mean we didn’t use the proceeds from oil and gas responsibly.” Oil revenue played a vital role in education, infrastructure and agriculture, bringing the country towards self-sufficiency.
“But the mechanism we had was very straightforward, from the proceeds directly to the investment,” she says.