JAKARTA: Indonesia’s president wants a national fund that arranges haj pilgrimages to make investments in infrastructure projects that the country needs and the government itself cannot afford to build. The World Bank estimated this week there’s a funding gap of about US$500 billion between what Indonesia spends and what’s needed to deal with shortcomings.
Infrastructure bottlenecks have hurt economic growth in Southeast Asia’s largest economy for years and President Joko Widodo has made it his administration’s top priority to fix the situation.
On Wednesday, Widodo inaugurated the board of managers for a new independent haj fund agency. It takes over management of the fund from the religious affairs ministry.
Traditionally, the haj fund has put most of the money it receives from Indonesian Muslims, who pay deposits to get a place for a pilgrimmage, into banks.
Widodo told the new board that rather than leave funds “idle”, it is better to invest them in places that are “safe but with big profits”.
The president said the fund should get the first offer to invest in the government’s “brown field infrastructure projects” such as toll roads or ports, promising such investment would be profitable.
As of the end of 2016, the ministry managed 95.2 trillion rupiah (US$7.14 billion) of pilgrims’ money. The new board estimated the amount will top 100 trillion rupiah this year.
Pilgrims from Indonesia, home to the world’s biggest Muslim population, often wait almost a decade before making their trips.
Saudi Arabia sets a quota for pilgrims from every country to visit the Islamic holy city of Mecca. Indonesia’s haj quota for 2017 is 211,000 people.
One of the new haj fund managers, Anggito Abimanyu, said the newly-founded agency will focus on mapping out its programme, including its investment choices.
“It is possible under the law for us to invest in banking instruments, in portfolio or directly,” he said.
Separately, Darmin Nasution, coordinating minister for economics, said on Wednesday that visiting World Bank President Jim Yong Kim offered to Widodo to help Indonesia get more international funding for priority infrastructure projects. No details were disclosed.
Without mentioning the offer, Kim said the bank and the government of Indonesia, the World Bank Group’s third biggest client, “are going to demonstrate just how quickly a developing country can go from low to middle to high income status” by working together.