Indonesia names banker to head new sovereign wealth fund

Indonesia has named a senior banker to head a new multibillion-dollar sovereign wealth fund that is intended to underpin sweeping economic reforms in south-east Asia’s largest economy. 

Analysts said the appointment of Ridha Wirakusumah, head of Indonesia’s Bank Permata, along with other experienced financial sector professionals to the board of the fund, to be known as Indonesia Investment Authority, sent a strong message to the market.

That the newly appointed directors have “cut their teeth in the private sector” signals that Jakarta wants “to do this right, to strike a professional tone [and] pay attention to governance structure”, said Wellian Wiranto, an economist at OCBC Bank.

Indonesia’s new fund represents the first serious test of a package of extensive reforms passed by Jakarta in October that are designed to attract foreign investors to the world’s fourth most populous nation.

It will also be the first significant gauge of international appetite for sovereign wealth funds in the region after the multibillion-dollar 1Malaysia Development Berhad embezzlement scandal in its south-east Asian neighbour.

Indonesia wants to use the fund to propel much-needed infrastructure investment in the country as it seeks to revive an economy that shrank 2.2 per cent in the fourth quarter of 2020 against a year earlier.

Unlike most sovereign wealth funds, which typically manage a country’s surplus reserves, Indonesia is seeding the new vehicle with up to $6bn while looking to raise funds from international investors for what President Joko Widodo said could eventually become a $100bn fund.

Wirakusumah joined Permata, formerly a joint venture between Standard Chartered and Astra — the Indonesian group controlled by Hong Kong-based conglomerate Jardine Matheson Holdings, in 2016. Bangkok Bank last year completed an acquisition of the Permata stakes held by StanChart and Astra.

Wirakusumah previously held senior roles at private equity group KKR and at General Electric and AIG.

OCBC’s Wiranto said Wirakusumah’s experience at KKR would be “useful . . . in setting up a private equity-type structure” at the new fund.

Arief Budiman, a former director at Indonesian state-owned oil company Pertamina, was appointed deputy chief executive, while Stefanus Ade Hadiwidjaja, managing director at private equity firm Creador, was named the fund’s chief investment officer. 

Marita Alisjahbana, country risk manager at Citi Indonesia, was named chief risk officer, while Eddy Porwanto, former chief financial officer at airline Garuda Indonesia, will have the same role at the new fund.

Luhut Pandjaitan, minister of maritime affairs and investment who has helped to set up the sovereign wealth fund, told the Financial Times in December that Indonesia had obtained up to $15.5bn in the first round of fundraising.

The chief executive of the US International Development Finance Corporation, who Jakarta said had committed $2bn to the sovereign wealth fund, has left the development bank following Joe Biden’s presidential win.

But the ministry of maritime affairs and investment said this “does not change the old tradition in the US of honouring previous commitments”.