Indonesia’s sovereign wealth fund investment activities have kicked into high gear in 2024, as it inked two collaborations to develop local infrastructure, real estate and natural capital.
Indonesia Investment Authority, known as INA, on February 6 announced a partnership with Manulife Investment Management to develop Indonesia's infrastructure, with a focus on the real estate and natural capital sectors.
The partnership aims to capitalise on the growing demand for logistics properties driven by the rapid expansion of the e-commerce market in Indonesia.
“Indonesia is one of the most attractive markets, given its surging consumer class and the exponential growth of e-commerce," said Peter Kim, senior managing director and head of institutional business, Asia Pacific (ex-Japan) at Manulife Investment Management.
"We recognise there is robust demand for high-quality logistics, data-centers and other new economy infrastructure assets in the country from both multinational and domestic customers,” he said.
By partnering with Manulife, INA is addressing the urgent need for modern logistic facilities and data centres, positioning Indonesia to capitalise on its digital growth trajectory.
Despite being the second-largest e-commerce market globally and the foremost in Southeast Asia, Indonesia is confronted by a critical shortage of modern warehouse spaces.
E-commerce penetration rates are expected to soar from 57% in 2022 to 78% in 2025, and revenue is projected to climb from $68.5 billion in 2023 to $104.1 billion by 2027.
As the nation's sole sovereign wealth fund, INA has a dual mandate: to fuel Indonesia's sustainable economic growth and to generate wealth for generations to come. This partnership aims to do both.
REAL ASSETS, REAL GROWTH
This is the second time this year that the SWF has announced an infrastructure-themed collaboration.
INA in January also announced a collaboration with Dutch pension fund manager APG Asset Management and sovereign wealth fund the Abu Dhabi Investment Authority (ADIA) to invest in the Trans Java Toll Road sections – the initial seed assets for Indonesia’s first toll road investment platform.
“With our toll-road platform partners, we have secured a commitment to invest $2.75 billion. Over the next five years, we aim to significantly increase our investments and establish ourselves as one of the leading investors in Indonesia's toll road sector,” Arief Budiman, deputy CEO of Indonesia Investment Authority, told AsianInvestor.
While INA's collaboration with ADIA and APG is aligned with community interests, it also exemplifies the forward-thinking mentality of the sovereign wealth fund team in leveraging the expertise of more experienced foreign investors.
“With their expertise investing and managing infrastructure assets across the globe, we believe that ADIA and APG can bring not only capital, but also expertise and resources to manage our infrastructure assets better,” said Budiman.
These roads are more than just transport routes; they are economic conduits that stimulate trade, reduce travel time, and contribute to regional economic expansion.
“As we have seen in most toll-roads in Indonesia, such infrastructure has positive correlations with regional development and trade activities, and creates employment opportunities specifically in the areas surrounding the toll roads. In the broader scope, these developments are poised to contribute to Indonesia's GDP growth, stimulate local economies, and advance the nation's socio-economic goals,” he said.
Since its inception, INA has deployed over $3 billion with co-investors in less than three years and formed strong partnerships with a diverse range of global investors.
The SWF’s partners include sovereign wealth funds to pension funds and asset managers, each playing a part in Indonesia's infrastructure and sustainable development narrative.