The presence of the sovereign wealth fund is the game changer for Indonesia as it attracted the interest of the Investment Fund for Developing Countries of the Kingdom of Denmark for potential joint investments of up to $500 million.
The sovereign wealth fund proposal should be pursued since it is in the interest of the nation that the country has a financial pool that would maximize its economic opportunities in the post-pandemic world.
Jakarta is putting its sovereign wealth fund called Indonesia Investment Authority into good use in the race for the electric battery industry which is pivotal in its aim of ultimately securing a pole position in the electric vehicle and solar energy business in the region.
The Philippines and Indonesia, both with huge nickel reserves, are competing for the development of storage battery manufacturing which is crucial in the renewable energy and electric vehicle industries.
Recent developments, however, will secure the lead of Indonesia unless the country matches its financial muscle.
It is deploying its sovereign wealth fund for battery development and nickel mining as initial steps toward its main target of an electric vehicles industry that will make the country among the pioneers in the region.
Indonesia's wealth fund INA plans to set up an electric vehicle fund of at least $2 billion with China's battery maker CATL and Hong Kong-based financial services firm CMB International to kickstart its pursuit.
Several local big businesses in the region have embarked on the development of high-capacity battery technology which will allow larger-scale adoption of EVs and solar energy.
Japan's Toyota pledged $1.8 billion to produce EV vehicles because of Indonesia's aggressiveness in the new field.
Taiwan's Foxconn also plans to establish a joint venture for battery and EV manufacturing. German automaker Volkswagen is also likely to invest in the EV battery ecosystem in the country.
The presence of the sovereign wealth fund is the game changer for Indonesia as it attracted the interest of the Investment Fund for Developing Countries of the Kingdom of Denmark for potential joint investments of up to $500 million.
The Danes wanted the money also invested in the green energy transition projects in Indonesia.
INA and IFU, based on their agreement, will provide capital to green and sustainable projects in the range of $100 million.
Due to a barrage of unfounded criticisms, the proposed Maharlika Wealth Fund was effectively emasculated as legislators have given in to the critics who said that the fund will be prone to misuse and have removed the pension funds as its source of finances.
House Bill 6398 will be amended to remove Government Service Insurance System and the Social Security System as funding sources for the Maharlika Wealth Fund, which will use instead central bank funds.
In comparison, Indonesia has built up a $25 billion investment war chest after starting in February 2021 with $5 billion from state institutions.
As for the MWF, despite the assurances of economic managers that it will be well managed with professional financial experts on its board, partisan brickbats rained on it.
Indonesia's advantage is that it has less of the destructive politics that had hostaged the Philippines and deprived the country of realizing its potential as a progressive economy.
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