The United States’ International Development Finance Corporation (IDFC) has sent a letter to the government of Indonesia to provide more details on its plan to finance development projects in the country.

Established in late 2019, the IDFC finances development projects in lower and middle-income countries. IDFC CEO Adam Boehler said in the letter dated July 31 that the agency was currently in talks with the US National Security Council (NSC). The council would lead the interagency coordination in the US to develop the partnership plans offered by Indonesia.

The IDFC will channel its investment to projects in the pharmaceutical, defense, security and energy sectors as well as in Indonesia’s planned sovereign wealth fund — a state-owned investment fund. “[Coordinating Maritime Affairs and Investment Minister] Luhut really appreciated the positive response from the US via the IDFC and its interest in being a valuable partner for Indonesia.

As [the US] requested, the government will provide further guidelines on cooperation in several sectors,” Jodi Mahardi, the spokesperson of the minister, was quoted as saying in a statement on Thursday. The news comes around seven months after President Joko “Jokowi” Widodo announced in January that the IDFC was planning to allocate US$5 billion for investment in Indonesia.

President Jokowi met with Boehler in the same month, expressing Indonesia’s need for the agency’s investment, as the archipelagic country was seeking to expand its funding sources for infrastructure projects. The IDFC has expressed interest in investing in Indonesia’s planned sovereign wealth fund to finance infrastructure development across the archipelago.

The United Arab Emirates, meanwhile, has expressed its interest in investing $6.8 billion in the fund. With regard to defense and security, the IDFC is interested in investing in projects in Riau Islands’ Natuna regency, which is located in the southern part of the contested South China Sea (SCS).

The Office of the Coordinating Maritime Affairs and Investment Minister stated that, as a maritime country, Indonesia needed investment in its outermost islands, which would help protect the country’s sovereignty and enhance security. In line with the ongoing shift in the global supply chain, the government was also expecting an investment from American pharmaceutical companies wanting to relocate to Indonesia from China.

Source : The Jakarta Post August 2020.