This week the Indonesia Investment Authority (known as INA) signed two agreements to invest US$ 2.7 billion in three parts of the Trans-Sumatra toll-road as well as in two parts of the Trans-Java toll-road. When finished, the former will cover 2,818 km across the Western island while the latter will be 1,167 km long and link the country’s (current) capital city, Jakarta. The total cost of both projects is estimated at over US$ 40 billion.

The capital committed by INA does not only come from the initial injection from the Ministry of Finance, but it is part of the investment platform it formed with ADIA, APG and CDPQ in May 2021. In this context, the State-Owned Investors from Canada, Netherlands and the UAE have managed to invest in highly strategic assets without having to go through formal auctions, and ensuring that the domestic government has some “skin in the game”.

The toll-road platform falls under INA’s traditional infrastructure theme, along with a seaport facilities platform, which Dubai-based DP World committed to in October 2021; and an airports platform, which is investing in the expansion of Indonesia’s busiest airport, Soekarno-Hatta.

But the Indonesia SWF is planning to go beyond traditional infrastructure, and has defined several other key sectors for the future, including renewable energy, healthcare, financial services, consumer and tech. In November 2021, ADQ-subsidiary ADG was the vehicle chosen by the UAE Government to channel a US$ 10 billion commitment into the Asian country. ADG will be seeking to work with INAthrough an agile approach in various forms of high-yield financial investments, both liquid and non-liquid equity strategies”.

The Indonesian Government has been marketing INA very aggressively, and has reportedly reached out to more than 100 different parties including sovereign wealth funds and public pension funds since it launched in February 2021. According to CRO Marita Alisjahbana, the vehicle has already raised US$ 25.5 billion, which is looking to deploy in at least 50 projects.

INA is part of a new breed of “catalytic funds”, established with the aim of attracting foreign capital into the country (inbound), rather than investing national capital overseas (outbound). The pioneer of such funds was Russia’s RDIF, which maintained an impressive 9x multiplier effect until March 2022, although INA is probably modeled after India’s NIIF, which has a strong preference (and need) for domestic infrastructure investments. Similarly to NIIF, INA planned to set up a Master Fund along with teh different Thematic Funds, although the former does not seem to be in place yet.

The Indonesian SWF may be part of the international consortium that will finance the construction of the country’s future capital city, Nusantara, out of Borneo island.