On Tuesday, the UAE’s state Emirates News Agency said that by investing $10 billion in Indonesia’s wealth fund, the UAE is in the motive to further cement the relationship between the two markets. This investment is considered the biggest foreign investment commitment done this year.
For What Purposes The Investment Will be Used?
The investment of the UAE will be used for the infrastructure projects, including the roads and ports, tourism, agriculture, and also in other “strategic sectors” that can contribute to the growth, economic and social progress. Jakarta will seed the fund with $5 billion in cash and other assets. The Indonesia Investment Authority(INA) seeks the foreign funds as co-investors to finance the economic development of the country and aid the global pandemic recovery. But the timeframe of the investment is not clear yet.
Relation Between The UAE and Indonesia
On Monday, Fitch Ratings said that the launch of the INA will reduce the debt level of the companies. But if the fund can channel the overseas capital into the infrastructure, then the capacity of Indonesia to mobilize the funds may be amplified. In 1976, the official diplomatic relations between the UAE and Indonesia started. The two countries also enjoy strong political and cultural ties. Diplomatic relations are important as both the countries share the solidarity as Muslim majority countries.
TPT Policy Advocacy & Recommendations
- Indonesia is considered a major economy with a very healthy growth rate. So, the investment if used for the right purposes of the country, then the economy of Indonesia can grow at a rapid rate and it can also revive from the losses suffered due to the global pandemic.
- The investment of the UAE in Indonesia will also give various opportunities to foreign investors with different types of risk profiles.