*

AI supply chain stocks seen as key for diversification

*

Investment in chipmakers such as Nvidia ( NVDA ) depends on

valuation

*

Fund awaits approval to invest up to 5% of portfolio

abroad

*

Rupiah stability also a criterion for overseas investment

(Adds text summary points, details; paragraphs 1-16)

By Stefanno Sulaiman

JAKARTA, Nov 24 (Reuters) - Indonesia's social security

fund is keen to invest in firms that provide infrastructure for

artificial intelligence, if it wins government approval for

overseas investments, a director told Reuters.

One of Indonesia's biggest institutional investors, the fund

awaits regulatory approval for its bid to expand beyond limited

domestic opportunities, Edwin Ridwan, the director of investment

development, said on Monday.

"The artificial intelligence (AI) supply chain will be a

good diversification for our investment, and it could be in the

United States, Taiwan, Japan and South Korea," he said, adding

that there was no timeline for the decision.

The fund, BPJS Ketenagakerjaan, is seeking approval to

invest up to 5% of its portfolio overseas, Edwin said. It has

assets of 879 trillion rupiah ($52 billion) under management.

The fund sees investment opportunities in companies that

support the AI industry, such as data centres, energy companies

that supply power to it, and cable firms, Edwin said.

Core AI firms, such as chipmakers were already "too

crowded", he added, though he did not rule out possible

investment in chipmakers such as Nvidia ( NVDA ), saying instead

that any decision would depend on the firms' valuation.

In April, Reuters reported that the fund wanted to double

its exposure to local equities to up to 20% within three years,

from about 10% at the time. Bonds were the largest share of its

investments, with the rest in deposits and other instruments.

The fund is unlikely to invest in overseas private equity,

so the majority of the permitted funds, or about $2.5 billion -

is likely go into the stock market, Edwin said, destined for

third parties, such as exchange-traded funds or mutual funds.

INVESTMENT DECISION HINGES ON RUPIAH STABILITY

Indonesia is preparing regulations on management of asset

liabilities for pension funds to serve as the legal basis for

the fund to invest overseas, Edwin said.

is also in talks with stakeholders to allow pension funds to

invest in gold as well a clause for cutting losses on

investments under certain terms and conditions, he added.

Asked when the rules were likely to take to effect, Edwin

said it was probably only when the rupiah had stabilised, as

overseas investments that increase demand for foreign currencies

could undermine the currency.

"Even if we were already allowed to (invest overseas), I

would think we will wait until rupiah can be considered stable,"

he said.

One of Asia's worst performing currencies year-to-date, the

rupiah has depreciated more than 3% against the dollar to stand

at around 16,700 rupiah.

Financial market investors have flagged concerns over

Indonesia's fiscal discipline following the sacking of respected

finance minister Sri Mulyani Indrawati.

($1=16,700 rupiah)