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00:00Bloomberg's been told that the country's sovereign wealth fund, Danantara, has received enough pledges for its plan to issue $3 billion of so-called Patriot bonds.
00:10Sources say up to 50 investors, including Indonesia's wealthiest tycoons, will participate in the offering.
00:17This comes amid a push by President Prabowo Subianto to rein in Indonesia's billionaires and address rising inequality that sparked riots in August.
00:26Let's get insights from Pandu Sharer, Chief Investment Officer of Danantara Indonesia.
00:32Pandu, could you have me with us?
00:33Hi, good to be here.
00:34We talked about this Patriot bonds meant to be issued today, but that's not happening.
00:39Oh, I think it is. It will get done. Today is actually the registration.
00:43So we should finalize this in the next few weeks.
00:46But essentially, it's already a finished discussion on Patriot bonds.
00:50And we're so happy that, you know, there's a lot of interest from mostly the leading businessmen in our country.
00:55So commitments from how many of these tycoons and how much are we looking at?
00:59$3 billion is the number we have.
01:01Roughly around $50 trillion, so equivalent to $3.1, $3.2 billion.
01:06And the idea of the Patriot bond really is to put together the leading families, the leading business groups in Indonesia,
01:12to focus and co-develop projects that have significant economic impact.
01:16One of them that we just announced yesterday is Waste to Energy.
01:19So we're doing a collection of 33 Waste to Energy programs in Indonesia because the biggest problem in Indonesia today has to do with the environment.
01:27And you know, you've been to Jakarta, Aslinda.
01:29What this Waste to Energy project will solve that problem, and it has significant economic impact and some commercial impact.
01:36So that's really the purpose of Patriot bonds for projects that are like this, that have significant economic impact to our country.
01:42Now, the question is, why do you need this additional funding?
01:45We know that Antara has already said it has enough billions to spend to allocate to the projects that you mentioned.
01:51So this is such a great question.
01:53Really, it's a signaling that there's confidence.
01:56One of the issues I know that have been mentioned in the press is about confidence into the country.
02:00This signals confidence that a lot of our business people want to join together and develop a project that has significant economic impact for our country.
02:08The thing is, these tycoons are paying 6% for the loans, but they're getting 2% yield.
02:17Economics do not make sense.
02:18I'm just wondering, what's convincing them to do this?
02:21Yeah, so again, as I mentioned to you, the economic, in my definition here, is job creation, specific for Waste to Energy, issue with respect to environment.
02:30So for them, the way they look at it, I got a bond, my principal is protected, and at the same time, I can do good for Indonesia.
02:37Though they can get better returns elsewhere.
02:39They are.
02:40Even southern funds in Indonesia will yield 5%.
02:43So the issue is not return in terms of commercial return.
02:47The focus really is on the economic impact on the projects they do.
02:50So, for example, they have their own foundations, a lot of the foundations they do, and their job, but their focus is not on return commercial.
02:56For us, the way we look at it, this can be a way to have a platform together.
03:00We call it Patriot Bond, right, aptly said.
03:03And the idea is to focus doubling down on projects that have significant national impact to our country.
03:09Was there any pressure on these tycoons to participate?
03:13We know it's voluntary, but, you know, we've done some reporting, some suggested perhaps there was quite a lot of pressure on these tycoons to actually participate.
03:21They have been in Indonesia, I think, maybe longer than even the Republic, some of the largest ones.
03:26They've seen up and down in the industry.
03:28They see this as actually a significant way to contribute to the country back.
03:33And to be honest, among the leading business people I've talked to, at least maybe they tell me, they're very excited about this project because it can be run professionally in a very large scale.
03:43So they see it together, all the business people doing significant projects together.
03:48The first of its kind, right?
03:49We've not had this before.
03:51Are you planning a second one?
03:53Is there reason to think you might issue yet another Patriot Bond?
03:56So the focus is just do this and do this very well.
03:59Make sure that the projects...
04:00Do we do this once or do this, do this twice, whatever it takes?
04:04What matters most, it has to have good impact, great impact economically.
04:09So we have to showcase.
04:10So that's why this waste of energy that we announced yesterday and now I'm mentioning it to you, we have to be able to execute this well.
04:16So you're open to the fact that you may issue more Patriot Bonds?
04:20It depends on the success of this Patriot Bond and the way we use the capital.
04:24I think the discussion should be not about the issuance of Patriot Bond, more of the usage of this capital and the fact that we can do it.
04:31And I'm sure Bloomberg and your team will report this well.
04:34How do you define success?
04:35The way we define success, making sure the project comes on time, the project is run properly, and also make sure that the governance and reporting is there.
04:44Lastly, it also has to bring, for example, issue environment.
04:48We can lessen the issue of environment in the big cities.
04:50And number two, we can also create jobs because, again, that's our job, too, is to be able to create jobs.
04:55And lastly, for Waste2Energy, we want to bring the best technology provider for these sectors.
05:01You talked about how the bonds will not be issued today.
05:04It's coming.
05:05Can you provide a date on when the bonds will be issued?
05:08So today is actually the settlement with OJK.
05:11So after that, in terms of transaction, it's just the next few weeks.
05:14It's similar to a company going public or issuing bond.
05:17We have already registered.
05:18The registration date is today.
05:20Any regulatory issues?
05:22No.
05:22We've already managed with OJK.
05:24That's probably the main body that we have to discuss with.
05:26So far, so good.
05:28We've heard from Dementara time and time again about how it has about $8 billion to deploy.
05:34Where are you with that?
05:35So this year, we've already mentioned 80% will be domestic, 20% internationally.
05:41And in international, we will invest in projects that bring value in terms of technology and transfer of knowledge.
05:47That's most important.
05:49We've also mentioned already that we will do, at least domestic market, that we will do mainly public first.
05:55So a majority will be public.
05:56And then 50% to 60% in public market, 30% to 40% in private markets.
06:01And one of the things why we're here also in the Milken Conference, our job the next few years is to create partnership.
06:08Partnership with leading fund managers, global managers, as we deploy capital around the world.
06:13So this is the reason why we're also here today in Milken.
06:16So 80% of your funds will be deployed?
06:18For this year.
06:18For this year.
06:19This year, only three months left.
06:20Right.
06:20So when exactly?
06:22What exactly?
06:23Can you provide some details on that?
06:25One of them, obviously, will go to the public market.
06:27As I mentioned today, 80% domestic, 20% foreign.
06:32So that's already now being done this month.
06:35And we're also now creating partnership in terms of investing into fund managers.
06:39So we will make commitments, I think, by end of this year and early next year.
06:43And then third, direct projects or capital formation in our country.
06:47Some of the things we need, for example, like our waste to energy.
06:50That's essentially a $5 billion project, both equity and debt.
06:54We obviously will be there on the equity side.
06:56And then second, well, probably things related to renewable energy, because Indonesia has
07:01a very ambitious renewable energy program.
07:03We want to become transitioning from fossil fuel to renewable energy in the next 10 years.
07:08So most of it domestically, but there are plans for overseas.
07:12I mean, we know Darren Tara has talked about how.
07:13We have to.
07:14You know, it wants to invest in projects in the U.S., upstream oil and gas, for instance.
07:18Where are you with that?
07:20So on the upstream oil and gas, I know you've reported on a couple of things.
07:23We are looking at upstream in terms of increasing our barrel per day owned by Pertamina, which
07:28is one of the companies that we own.
07:30We want to go from 800,000 barrel per day to something much bigger.
07:33So their job is to look at assets to acquire both in the U.S. and elsewhere.
07:37And we want to own that.
07:38And we will help in Danantara as a financing partner to Pertamina and others.
07:42So that is our job the next few years, looking at opportunities abroad.
07:47And when it comes to opportunities in the U.S. in particular, what do you see?
07:50And are there concerns about the uncertainties in the U.S. market?
07:53Yeah, I mean, you just reported just now what's going on politically.
07:56But I think U.S. is still a very good market.
07:59One of the things we want to focus on looking at technology, we want to look at upstream in
08:04terms of energy source.
08:05I think energy is very important.
08:08Data center, we're looking at that, too, in terms of infrastructure, technology infrastructure.
08:12Those are probably the key points we will look at.
08:15And globally, too, one of the things we're looking at is in terms of food security, because
08:19I think the discussion of food security is becoming increasingly important in the world
08:23we live in today.
08:24Interesting that you mentioned recently that Freeport will be divesting 12 percent of its
08:31local arm to Indonesia.
08:33Talk to us about the details of it, because, you know, the most recent update that we have
08:39is that it's going to be free of charge.
08:40I think I want to hold, because Freeport is also publicly listed.
08:44But obviously, there's some sort of agreement where they will have, I would say, another
08:4840 years of operation.
08:50But in terms of the detail, I will hold off, given that, you know, I think Freeport Mac
08:54Miranda is a publicly listed company.
08:55So it is possible it could be free of charge.
08:57Are there any strings attached, any details that you can provide?
09:00Not today, given I have to be careful, because obviously it's a publicly listed company.
09:04But it is a possibility.
09:06Always.
09:07So it is a possibility.
09:09It could be free of charge.
09:10I wouldn't say free of charge.
09:11There's always a cost.
09:12Freeport is a business group, right?
09:13They also want to make sure that they do the business that makes sense to their minority
09:18shareholders as well.
09:19So I'm sure, you know, it is something, a business that is a win-win for both sides.
09:24So you're still in negotiations?
09:25You're still in talks?
09:26I think it's almost final.
09:27But I think I will wait from Freeport to announce.
09:30We have the recent accident in the mine in Indonesia.
09:33Has that got a role to play in what's happening with Freeport?
09:37No, I think anything in mining safety is number one.
09:41I think that's the most important.
09:42That is part of the way you have to run the business.
09:45And as you know, it's very complex.
09:46Grassberg Mine is a very complex operation.
09:49We were very sad when we hear the news.
09:51Freeport is doing everything it can to be able to solve.
09:54And also taking care of the people that went through that accident.
09:58So, you know, I want to hold off my thought.
09:59I'll give it to Freeport to comment on that.
10:02When it comes to such divestments, do you think this is a precursor to what may happen
10:07to the other commodities in the industry in Indonesia, like nickel, like coal?
10:14Might you adopt this model for the other commodities as well?
10:17So as you know, in the world, most important is you have upstream assets.
10:20We want to make sure we develop it.
10:22The last decade, as you know, Aslinda, we've developed well with respect to nickel.
10:26I think critical mineral is probably the global theme today of investment.
10:30We want to develop also the critical mineral we have and work with other sovereigns to be
10:34able to develop critical minerals for the daily use you're doing, your handphone, your
10:38cars, et cetera.
10:39So we will guard that jealously.
10:41We want to make sure we get the best economic value and the best commercial value out of it.
10:46When we started talking about Danantara, the issue of governance was front and center.
10:51We know that when it comes to governance, the state-owned enterprises minister oversees
10:56and, you know, does the checks and balances of Danantara.
11:01Now that he has been replaced, been removed by the CEO of Danantara itself, what's the status
11:08of governance of Danantara?
11:10Who will be doing that?
11:11So, you know, frankly speaking, you know, Rosan, my colleague, who's now the minister
11:16of investment, it's not unique because we also have in Abu Dhabi, we have the minister
11:22of investment, also serve as CEO of ADQ.
11:24So it's not something unique.
11:25With respect to my other colleague, Donnie, who's now serving as the temporary chair of
11:30the SOE, that's also not unique in my view.
11:33So what we're doing, obviously, we're going through the parliament today in terms of what
11:38will be the new role of the SOE, most likely it will simply be a regulator, but the daily
11:43operation will be with us in Danantara.
11:45So really our focus is corporatizing all the SOE, really focus on creating shareholder
11:50value for all the businesses that we already own today, right?
11:54And now my job, too, is also create new businesses that also add economic value.
11:59But how do you ensure governance in the meantime?
12:01What measures are in place?
12:03What steps are you taking to ensure governance?
12:05I think governance is first and most paramount within Danantara.
12:09You asked me this question five months ago when there was only three of us, today we're
12:13about 300 people strong, and also nine nationalities, so really global in nature.
12:19And the governance, when you mention it, we have to act like the best sovereign fund.
12:23We have to report.
12:24And if you look at the publicly listed companies, there's 18 of them.
12:28The best way of measuring it is just stock price performance.
12:31And I think every day the market judges, you judge us, the media judges.
12:34We know that whatever we do here will be judged by many people.
12:38So we have to make sure that we have the best governance and the best process.
12:42Alia, you talked about how you're looking for partnerships.
12:44We know that Danantara has tied up with its counterpart in Russia, RDIF.
12:50It is a multi-billion dollar deal.
12:53What projects are you looking at to fund?
12:55So, you know, we are doing with multi-sovereign funds, with the Qataris, QIA, it was actually
13:01the first deal we did in terms of partnership.
13:04We're also working with ADQ.
13:06We're also working with CIC that we've announced.
13:09So we are here to do partnerships with global institutions.
13:12And Warren, this is why we're here.
13:13But the partnership with Russia, though, what's the plan?
13:15No, I think all of it is how do we build capital formation in Indonesia.
13:19We want to focus, for example, I mentioned to you, waste to energy, energy transition.
13:23I think energy is still a big team the next 12, 18 months.
13:27And that will be the main focus of us.
13:29This is a country under sanction.
13:31And there are issues with the payment system.
13:36I'm just wondering, how will it work?
13:38How do fund transfers work, for instance?
13:40So we will work in terms of just press practices.
13:43I understand all the key concerns that's out there.
13:45We will work under the governance that we've set.
13:48Some of the best sovereign wealth funds.
13:50And again, I understand all the key concerns.
13:52We want to make sure that we maintain the reputation, the integrity.
13:55It's very easy to lose reputation, right?
13:58So we're doing it step by step every month to build the trust and the reputation.
14:02So you're confident in getting the funds that has been committed by RDIF to Danantara?
14:08I leave it to RDIF because I cannot comment.
14:10But for us, we will create best projects that have good returns for the sovereign wealth funds.
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