Government officials say the fund will attract foreign capital, create jobs, and boost GDP growth beginning in 2026
JAKARTA, March 3, 2026 — The Government of Indonesia on Monday officially launched a $20 billion sovereign wealth fund in Jakarta aimed at financing infrastructure and renewable energy projects, with President Prabowo Subianto announcing that the fund will begin operations in the second quarter of 2026 to attract foreign investment, create an estimated 150,000 jobs, and raise national economic growth by 0.5 percentage points annually.
The fund, named Nusantara Investment Authority II (NIA II), will be headquartered in Jakarta and capitalized through a combination of state assets, government bonds, and co-investment commitments from international partners in Asia, the Middle East, and Europe. Officials said the initiative is designed to address Indonesia’s infrastructure financing gap, estimated at $1.7 trillion through 2035.
Finance Minister Sri Mulyani Indrawati said the fund would prioritize toll roads, seaports, airports, and solar and geothermal energy projects across Java, Sumatra, and Kalimantan. “This vehicle is structured to ensure transparency, strong governance, and measurable economic returns,” she said during the launch event at the State Palace.
Funding Structure and Governance
According to the Ministry of Finance, NIA II will begin with $10 billion in state-backed capital and seek to mobilize an additional $10 billion from foreign institutional investors by the end of 2027. The government confirmed that discussions are underway with investors from the United Arab Emirates, Japan, and Singapore.
The fund will operate under an independent board of directors and supervisory council appointed for five-year terms. Officials stated that governance guidelines will follow international standards set by the International Forum of Sovereign Wealth Funds.
A detailed framework outlining investment criteria and risk management protocols was published Monday on the Ministry of Finance website, which cited compliance with the Santiago Principles, a globally recognized benchmark for sovereign wealth funds. Additional information about the principles is available through the International Forum of Sovereign Wealth Funds at https://www.ifswf.org.
Economic Impact Projections
Indonesia’s Coordinating Ministry for Economic Affairs projects that NIA II investments will support 0.5 percentage points of additional GDP growth annually beginning in 2027. The ministry reported that Indonesia’s GDP grew 5.1% in 2025, supported by domestic consumption and commodity exports.
Coordinating Minister for Economic Affairs Airlangga Hartarto said the fund would “strengthen long-term capital formation and reduce reliance on short-term portfolio inflows.” He added that renewable energy investments are expected to contribute 10 gigawatts of additional capacity by 2030.
The Energy and Mineral Resources Ministry confirmed that 40% of the initial investment portfolio will be allocated to solar, hydroelectric, and geothermal projects aligned with Indonesia’s target of achieving net-zero emissions by 2060.
Investor Participation and Market Reaction
Officials stated that memorandums of understanding have been signed with three international investment groups, though specific names were not disclosed. The government expects the first round of foreign capital commitments to close by July 2026.
The Jakarta Composite Index rose 1.2% on Monday following the announcement, according to data from the Indonesia Stock Exchange. Analysts attributed the increase to investor optimism regarding infrastructure expansion and energy diversification.
Raden Pardede, managing director at Mandiri Sekuritas, said the fund’s launch could improve Indonesia’s investment-grade outlook. “If governance standards are maintained, this could significantly enhance Indonesia’s attractiveness to long-term institutional investors,” he said.
Historical Context and Precedent
Indonesia previously established the Indonesia Investment Authority (INA) in 2021 with an initial capitalization of $5 billion to co-invest in infrastructure and strategic sectors. Since its inception, INA has partnered with global investors on toll road and telecommunications projects.
Government officials said NIA II differs from its predecessor by focusing more heavily on green infrastructure and expanding the scale of foreign capital participation.
The World Bank has previously identified infrastructure bottlenecks as a constraint on Indonesia’s productivity growth. In its 2024 East Asia economic update, the institution noted that closing the infrastructure gap could raise Indonesia’s long-term growth trajectory. Further details are available through the World Bank’s official website at https://www.worldbank.org.
Implementation Timeline
The government confirmed that the legal framework establishing NIA II was finalized under Presidential Regulation No. 12/2026, signed on February 15, 2026. Operational staffing is expected to be completed by April 2026.
Initial project disbursements are scheduled for June 2026, beginning with two toll road expansions in West Java and a 500-megawatt solar farm in East Nusa Tenggara.
Officials stated that quarterly performance reports will be made publicly available starting in the third quarter of 2026.
The Ministry of Finance said the fund’s performance will be audited annually by Indonesia’s Supreme Audit Agency to ensure compliance with national financial regulations.