Indonesia Investment Authority (INA), the sovereign wealth fund of Indonesia, and British International Investment (BII), the United Kingdom’s development finance institution (DFI) and impact investor, have on Tuesday announced a strategic partnership aimed at fostering sustainable economic development and cooperation, especially in green sectors.

Both parties said in a statement that the partnership, which has been formalized through the execution of an Investment Framework Agreement (IFA) between the two entities, will focus specifically within the spheres of green infrastructure, renewable energy, climate resilience and adaptation and related sectors.

The partnership underlines the synergy between INA’s dedication and BII’s investment focus to mobilize capital and catalyze select green sectors in Indonesia to achieve
development objectives on improved productivity, sustainability and inclusion.

Through this IFA, the parties intend to create a more enabling environment for facilitating investments and partnerships in private sector businesses in Indonesia.

Leveraging their combined strengths, experience, networks and a shared vision, the partnership is poised not only to seek optimal risk-adjusted returns on invested capital, but also to cultivate sustainable economic growth and address global climate challenges.

INA has designated green energy and transformation as one of its priority investment sectors, focusing on supporting the energy transition toward renewable energy in Indonesia.

Earlier this year, INA made its first strategic investment in green energy through PT Pertamina Geothermal Energy (PGE), the largest geothermal energy company in Indonesia.

Additionally, INA joined forces with Contemporary Amperex Technology Co., Limited (CATL) to establish a Green Electric Vehicle (EV) Fund that will concentrate on end-to-end EV value chain investment, primarily in Indonesia, reflecting INA’s dedication to support Indonesia’s sustainability and commitment to net zero carbon emissions by 2060.

Moreover, INA is marking its commitment in the energy transition mechanism (ETM) working together with Asian Development Bank (ADB) for pilot project, and PT Cirebon
Electric Power (CEP), for supporting the energy transition in Indonesia by phasing out coal-fired power plants.

In synergy, BII with its 75 years’ experience of investing to create more productive, sustainable, and inclusive emerging economies, is committed to boosting climate finance in the region.

As part of its current 2022-2026 investment strategy, BII re-entered Southeast Asia including Indonesia with plans to invest up to £500 million ($654.83 million) across the capital structure to support the region’s green energy transition.

This commitment was recently demonstrated through BII’s $15 million investment to the SUSI Asia Energy Transition Fund (SAETF), a Southeast Asia-focused energy transition infrastructure fund.

In Indonesia, it has invested in the development of run-of-river hydropower and wind projects via a joint venture between SAETF and regional developer Pacific Impact.

This reiterates the DFI’s renewed commitment to investing in climate finance in Indonesia, as one of BII’s priority markets in Southeast Asia.

“This partnership marks a significant step in INA’s mission to serve as a catalyst for Indonesia’s future growth and prosperity,” said Ridha Wirakusumah, INA’s Chief Executive Officer.

He said that collaborating with a leading development finance institution like BII strengthens INA’s dedication to supporting sustainable development throughout Indonesia.

He also said that this strategic alliance will bolster INA’s commitment to green investment, which is pivotal for sustainable and inclusive growth.

“BII’s wealth of knowledge, experience, and resources in this area serve as an impetus for INA to enhance our investment capabilities and impact,

“By leveraging our combined strengths, we are not only seeking optimal risk-adjusted returns, but also fostering a robust economic dialogue between Indonesia and the UK,” he said.

According to him, this alliance further marks INA’s dedication to leverage collective investment expertise for mutual growth and prosperity.

Meanwhile, British Ambassador to Indonesia and Timor-Leste Owen Jenkins said that this new partnership between BII and INA is the latest demonstration of the UK’s commitment to work with Indonesia on green investment opportunities, creating jobs and putting UK expertise at the heart of tackling climate change and supporting social, economic and
environmental benefits.

“As one of BII’s priority markets in Southeast Asia, Indonesia has the potential to become an international climate leader as it continues to accelerate low carbon energy transition,

“INA’s collaborations with BII reaffirms the commitment of both countries to realise that ambition,” he added.

BII’s Chief Executive Officer Nick O’Donohoe also said this partnership with INA will not only further BII’s ambitions to provide climate finance in the region but also support Indonesia to accelerate its energy transition goals.

“With a shared vision to catalyze investment in the private sector to drive sustainable economic growth, we look forward
to working with INA to support local businesses that are the forefront of innovations to mitigate climate change as well as increase climate resilience and adaptation,” he said.

According to the statement, the collaboration signals a new chapter in the economic relationship between Indonesia and the UK, with potential for substantial mutual benefits.

It aims to create pathways for resilient and sustainable economic growth, offering a platform for innovation and synergy in investments between the two nations.

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