Indonesia Investment Authority and China Exim Bank to Join Finance Indonesia Strategic Projects

Sovereign wealth fund Indonesia Investment Authority (INA) has signed a framework agreement with the Export-Import Bank of China (China Exim Bank) to deepen their economic and investment cooperation in the infrastructure, renewable energy and telecommunications sectors.

“As INA joins forces with China Exim Bank, we’re not just forging an economic partnership, we are also deepening the bond between the two countries,” INA CEO Ridha Wirakusumah said in a statement on Monday, welcoming the new agreement.

In the same statement, China Exim Bank vice president Chen Bin said: “Both parties share compatibility in various fields, such as new infrastructure and green development.”

One of the many potential areas for cooperation includes joint financing for projects in Indonesia or setting up specially earmarked funds for such projects in the country. INA and China Exim Bank also stated they were keen to explore strategic projects in Indonesia for possible financing, though neither party disclosed the investment potential of the cooperation. The scope of their cooperation also extends to mutual information sharing on economic trends, financial insights and market overviews, all the while ensuring compliance with the prevailing regulations. The agreement’s investment scope covers various asset classes, including common equity, preferred equity and convertible debt instruments, according to the statement.

Chen said the bank had identified the potential of China-ASEAN Investment Cooperation Fund II (CAF II) as a key investment platform. “As part of this collaboration, the China Exim Bank has demonstrated its commitment by outlining an intention to rally its affiliates, including through CAF II, to consider investment opportunities in Indonesia,” he said in Monday’s statement.

CAF II is a dollar-denominated offshore quasi-sovereign equity fund backed by the China Exim Bank as well as other institutional investors under the direction of China’s State Council. During the 2022 ASEAN Summit in Cambodia, then-Chinese premier Li Keqiang announced that China had set up a fund with China Exim Bank as the primary sponsor and an initial investment of US$1 billion. CAF II prioritizes investing in infrastructure and energy sources in ASEAN member states and is supported by big players such as the China Gezhouba Group, the China Road and Bridge Corp. and ESR Group.

INA has secured investment commitments from both domestic and foreign investors totalling over IDR 400 trillion ($26.03 billion). In 2022, the sovereign wealth fund recorded a significant net profit of IDR 2.62 trillion, a significant increase of more than ten times the previous year’s figure. The fund’s total assets grew to IDR 99.8 trillion in 2022, a 26 percent increase from the previous year.

September 12, 2023, The Jakarta Post(