The Indonesian government is expecting more investments from the Saudi Arabian government. The country, famously known as the largest exporter of petroleum, can do so through a sovereign wealth fund (SWF), currently being formulated by the Indonesian government.
The open invitation is a response to the underwhelming investments from China and the United States in the last few years. On the other hand, the Finance Minister, Sri Mulyani Indrawati, in an official statement released on 2/24, revealed that the Saudi Arabian investment had increased significantly.
Sri Mulyani claimed that the meeting with the Saudi Arabian Finance Minister, Mohammed Al-Jadaan, taken place during the G20 Finance Ministers and Central Bank Governors meeting in Riyadh, 22-23 February, resulted in an agreement to jointly develop strategic sectors in Indonesia through the sovereign wealth fund. The government plans to use the fund, pooling investment funds from various countries, including Saudi Arabia, to develop the new capital city in East Kalimantan and other projects in Aceh.
The Investment Coordinating Board’s data unveiled that the total Saudi Arabian investment in Indonesia in 2019 was only US$ 5.4 million, a slight improvement to 2018 investment at US$ 5.36 million. However, it was still below the expected number at US$ 6 billion, even though in April 2019, President Joko Widodo had already met King Salman and Prince Muhammad bin Salman.
Many Saudi Arabian funding companies are interested in investing in Indonesia. However, the lack of investment partners stopped them from doing so. As a consequence, the Indonesian government must try its best to convince not only the investors but also US-based investment banks as their investment advisors. Furthermore, the government must quickly capitalize on the momentum since the Saudi Arabian economy can expectedly grow up to 1.9 percent in 2020, a massive increase compared to the 0.2 percent growth in 2019.
Nevertheless, Indonesia is currently luring investments not only from Saudi Arabia but also from other countries in the region. During the Crown Prince of Abu Dhabi’s, Mohammed bin Zayed bin Sultan Al Nahyan, visit in July 2019, Indonesia, and the United Arab Emirates even signed three investment agreements, with the total value of US$ 9 billion. Both countries agreed to carry out the Refinery Development Master Plan (RMDP) project in Balikpapan, East Kalimantan, the Chandra Asri Perkasa 2 project to develop the petrochemical industry, and the international container port expansion project in Maspion 5 industrial zone in Manyar, Gresik, East Java.
Besides, Indonesia and Qatar have also signed a US$ 500 million investment contract in 2018. Based on the deal, Qatar will develop a five-star hotel in Mandalika, Central Lombok. The decision to choose Mandalika as one of the super destinations or the New Balis showed the Indonesian government’s commitment to supporting the investment. Meanwhile, in June 2019, the government picked Kuwait Foreign Petroleum Exploration Co (KUFPEC) as one of the winners in the oil and gas auctions. The company agreed to fund the development of Anambas Block for US$ 35.2 million.
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