Opinion | For Indonesia’s sovereign wealth fund, Widodo’s choice of managers supplies needed credibility
- Ridha Wirakusumah, who was named as head of the Indonesia Investment Authority, gets high marks for his integrity and experience
- In the wake of Malaysia’s 1MDB scandal, Indonesian government knew it needed ‘top-of-the-line professional management’ for fund, economist says
For a venture that requires government and private sector teamwork, the pairing seems right. Wirakusumah has also held significant posts in and out of Indonesia for multinationals including GE and private equity firm KKR. Budiman has ample experience inside Indonesia’s complicated and challenging bureaucracy.
The massive theft that occurred at neighbouring Malaysia’s state-owned 1MDB fund has cast a shadow that the INA wants to avoid. “The president doesn’t want this to be 1MDB,” Wirakusumah said of the INA at the unveiling of the leadership team on Tuesday. “We must have a well-managed sovereign wealth fund.”
Wellian Wiranto, an economist at OCBC in Singapore, wrote: “Given the recent 1MDB fiasco next door, the government knew that having a top-of-the-line professional management team is crucial in boosting the Indonesian sovereign wealth fund’s credibility and hence its funding and execution capabilities.”
The Indonesian entity arguably was misnamed a sovereign wealth fund. There are big differences between it and SWFs in Norway, Singapore and Abu Dhabi. Those were built on huge foreign reserves, or large oil exports and trade surpluses, providing ample funds for overseas investments.
