Makkah landmark hotel developer swings to loss after pilgrim numbers plummet

Makkah landmark hotel developer swings to loss after pilgrim numbers plummet
Makkah landmark hotel developer swings to loss after pilgrim numbers plummet

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Jeddah - Yasmine El Tohamy - JAKARTA: The UAE has announced it is studying investment options for infrastructure development projects in Indonesia before injecting more financial support through the southeast Asian country’s newly launched sovereign wealth fund.

As part of the recent Indonesia-Emirati Amazing Week tour of four cities, UAE Energy and Infrastructure Minister Suhail Al-Mazrouei and his delegation signed several business deals, including a pledge to develop a $500 million tourism resort on an island in Aceh province and a $1.2 billion port and industrial zone development scheme in Gresik, East Java province.

“When we met two years ago, no one was seeing these projects, now we are signing some of these projects,” said the minister, referring to Crown Prince Sheikh Mohammed bin Zayed Al-Nahyan’s visit to Indonesia in July 2019 — the first by a UAE leader since the crown prince’s father visited the country in 1990.

Some of the other agreements given the green light last week included follow-ups to the $22.9 billion investment deals inked during Indonesian President Joko Widodo’s visit to Abu Dhabi in January last year to develop the energy, infrastructure, and mining sectors, which will be channeled through the sovereign wealth fund.

In a joint press conference with his Indonesian counterpart, coordinating minister for maritime affairs and investment, Luhut Pandjaitan, Al-Mazrouei said that the UAE was keen on looking at assets for infrastructure development projects that Indonesia was offering through the new fund agency that the Abu Dhabi Investment Authority helped to establish – where it also serves as an adviser – and evaluate them before securing the investments.

However, he stopped short of revealing a figure, and pointed out that the UAE’s commitment to Indonesia was “more than a number.”

The minister said: The fact that  we work together on the creation of the sovereign wealth fund makes us committed to looking at it. We will continue working with Indonesia and supporting them, and this is the nature of our investments in every country.” Al-Mazrouei added that the UAE had promised Widodo that it would be “a candid and a good adviser.”

“Indonesia is a major economy and the largest Islamic economy. It is a vibrant economy with a very healthy growth rate. I think there are lots of things that can happen in Indonesia, so let’s not limit ourselves to a number,” he said.

The Indonesia Investment Authority was launched in February, with the government pledging to inject up to $5.3 billion in initial capital until the end of the year.

One of its priorities is developing infrastructure projects that offer more access and connectivity in the vast Indonesian archipelago, such as toll roads, airports, and seaports. Pandjaitan said the agency, which had a target to develop an initial $20 billion financing pool, had set up a master fund and thematic funds through which foreign investors could inject capital, adding that it was securing about $9.5 billion from investors since its establishment.

Earlier in January, Indonesia’s chief economic minister, Airlangga Hartarto, said that the US International Development Finance Corporation (IDFC) and the Japan Bank for International Cooperation (JBIC) had expressed an interest to inject $2 billion and $4 billion, respectively, into the master fund, while Canada’s global investment group CDPQ and Dutch investment company APG were also interested in committing up to $2 billion and $1.5 billion each in the thematic funds.

Singapore’s sovereign wealth fund agency GIC had also been in touch, although no figure has yet been revealed.

According to data from the Indonesia Investment Coordinating Board, Singapore ranked first on the list of foreign direct investment (FDI) in Indonesia last year, making up 34.1 percent of the overall FDI, with $9.8 billion worth of projects.

Toto Pranoto, an economist at the University of Indonesia’s school of economics and business, told Arab News on Monday that the establishment of the INA could reduce the gap between the funds required for development projects and Indonesia’s domestic funding capability.

It would also relieve some pressure on state-owned infrastructure development companies, which had been struggling to pump funding into the projects by issuing global bonds due to limitation in securing funds from the state budget, he said.

“The financial capital secured from the sovereign wealth fund would help to improve their cash flows,” Pranoto added. He noted that the INA could serve as a catalyst to attract foreign investors to inject financing into projects that could yield good returns for them.

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