Indonesian state-owned fund eyes overseas AI infrastructure opportunities, official says

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By Stefanno Sulaiman

JAKARTA (Reuters) -Indonesia’s social security fund is keen to invest in firms that provide infrastructure for artificial intelligence, if it wins government approval for overseas investments, a director told Reuters.

One of Indonesia’s biggest institutional investors, the fund awaits regulatory approval for its bid to expand beyond limited domestic opportunities, Edwin Ridwan, the director of investment development, said on Monday.

“The artificial intelligence (AI) supply chain will be a good diversification for our investment, and it could be in the United States, Taiwan, Japan and South Korea,” he said, adding that there was no timeline for the decision.

The fund, BPJS Ketenagakerjaan, is seeking approval to invest up to 5% of its portfolio overseas, Edwin said. It has assets of 879 trillion rupiah ($52 billion) under management.

The fund sees investment opportunities in companies that support the AI industry, such as data centres, energy companies that supply power to it, and cable firms, Edwin said.

Core AI firms, such as chipmakers were already “too crowded”, he added, though he did not rule out possible investment in chipmakers such as Nvidia, saying instead that any decision would depend on the firms’ valuation.

In April, Reuters reported that the fund wanted to double its exposure to local equities to up to 20% within three years, from about 10% at the time. Bonds were the largest share of its investments, with the rest in deposits and other instruments.

The fund is unlikely to invest in overseas private equity, so the majority of the permitted funds, or about $2.5 billion – is likely go into the stock market, Edwin said, destined for third parties, such as exchange-traded funds or mutual funds.

INVESTMENT DECISION HINGES ON RUPIAH STABILITY

Indonesia is preparing regulations on management of asset liabilities for pension funds to serve as the legal basis for the fund to invest overseas, Edwin said.

is also in talks with stakeholders to allow pension funds to invest in gold as well a clause for cutting losses on investments under certain terms and conditions, he added.

Asked when the rules were likely to take to effect, Edwin said it was probably only when the rupiah had stabilised, as overseas investments that increase demand for foreign currencies could undermine the currency.

“Even if we were already allowed to (invest overseas), I would think we will wait until rupiah can be considered stable,” he said.

One of Asia’s worst performing currencies year-to-date, the rupiah has depreciated more than 3% against the dollar to stand at around 16,700 rupiah.

Financial market investors have flagged concerns over Indonesia’s fiscal discipline following the sacking of respected finance minister Sri Mulyani Indrawati.

($1=16,700 rupiah)

(Reporting by Stefanno Sulaiman; Editing by John Mair)