DEFINITION of 'Government Investment Unit - Indonesia'

The Government Investment Unit - Indonesia is a sovereign wealth fund (SWF)  established in Indonesia and managed by the Ministry of Finance. The fund seeks to create macroeconomic stability and help promote economic growth by investing in a wide array of investment types, including equity, debt and by directly investing in the economies of foreign countries.

BREAKING DOWN 'Government Investment Unit - Indonesia'

The Government Investment Unit was established in 2006. Unlike the sovereign wealth funds of many other countries, it is not dependent on commodities as a funding source. The fund is not independent and works closely with the Indonesian government, creating separate funds to handle infrastructure and environmentally-related projects.

Green Investments

The Indonesian government has responded to issues of poverty and harmful environmental activities in the country with green investments. The Green Prosperity Project is a joint project of the Indonesian Government and the Millennium Challenge Corporation (MCC). Its objectives are to improve land use practices and natural resource development and expand the use of renewable energy.

The Sarulla Geothermal Power Development Project aims to reduce the country’s carbon dioxide emissions by 1.3 million tons per year by constructing, operating and maintaining three geothermal power generation units at a plant in North Sumatra, Indonesia. The Asian Development Bank (ADB) has invested $350 million in this project, which is backed by a 30-year joint operating contract with Pertamina Geothermal Energy and a 20-year guarantee from the Ministry of Finance.

The Tropical Landscapes Financing Facility (TLFF) brings long-term and low-interest financing to Indonesian projects and companies that promote sustainability. It is supported by the government of Indonesia in conjunction with UN Environment, World Agroforestry Centre, ADM Capital and BNP Paribas. The goals of the TLFF is to improve rural livelihoods with investments in renewable energy generation and restoration of forests.

The Indonesia Clean Technology Fund focuses on initiatives that promote energy efficiency and renewable energy, and supports the Indonesian government’s goal of reducing greenhouse gas emissions. Another objective is to increase electricity access to the Indonesian population. The plan looks to expand large-scale geothermal power plants, create risk-sharing facilities and address financing barriers to small and medium-scale investments.

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