Indonesia: After 1MDB scandal, investors view Indonesia’s new fund warily

Indonesia will need to step out of the shadows of neighboring Malaysia’s 1MDB scandal to convince investors that its new wealth fund won’t fall prey to corruption.

Nusantara Investment Authority will take lessons from other sovereign wealth funds and adopt a framework based on independence, transparency and accountability, said Isa Rachmatarwata, the finance ministry’s director general of state assets. It needs to assure potential investors that governance protocols are airtight when it starts operations in the second half of 2021, as the fallout from the 1MDB scandal has heightened scrutiny on emerging-market wealth funds.

“The region has had a bad name after 1MDB and people will think of that — how a similarly well-intended fund can go so wrong,” said Bank of America Securities economist Mohamed Faiz Nagutha. While Indonesia’s fund has attracted $6bn of pledges from the Japan Bank for International Cooperation and the US International Development Finance Corp., it could be a tougher pitch for private investors, he added.

The original full article can be found at aljazeera.com

(Photo: Free Malaysia Today)

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