[JAKARTA] Indonesia officially launched the Danantara investment fund on Monday (Feb 24), a high-stakes, multi-billion-dollar initiative designed to consolidate the country’s state-owned enterprises (SOEs), while serving as a powerful catalyst to attract investment and fuel the nation’s ambitious growth trajectory.
As part of its first wave of investments, Danantara will allocate US$20 billion to fund 20 high-impact national projects.
The funds will be allocated to key sectors including downstream nickel, bauxite, copper, artificial intelligence, oil refineries, petrochemical plants, food production, aquaculture and renewable energy – programmes that are central to President Prabowo Subianto’s ambitious goal of achieving an 8 per cent growth target.
At the launch, Prabowo signed a document at the presidential palace in Jakarta inaugurating the fund.
He highlighted that the creation of Danantara, which stands for Daya Anagata Nusantara – meaning “future power of the archipelago” – marks a historical step for the country to achieve prosperity.
With an estimated US$900 billion in assets under management, Danantara is poised to become one of the world’s largest sovereign wealth funds, propelling it to fourth place globally, ahead of Saudi Arabia and Singapore.
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The fund, which draws inspiration from Singapore investment company Temasek, is poised to play a central role in Indonesia’s economic strategy.
Prabowo emphasised its role not just as a financial powerhouse, but also as a powerful development tool that will reshape how the nation manages its wealth, ultimately driving greater prosperity for its people.
However, he did not provide specific details on which projects will receive the billions of dollars in investments.
“Through this initiative, we will establish strategic partnerships in renewable energy, infrastructure, education, and position Indonesia as a key global player, while contributing to regional and global prosperity and stability,” he said.
Danantara was founded by redirecting the dividends from seven major SOEs – Bank Mandiri, Bank Negara Indonesia, Bank Rakyat Indonesia, PLN, Pertamina, Telkom and Mining Industry Indonesia. These dividends, amounting to a staggering 1,000 trillion rupiah (S$82 billion), were drawn from the 2023 financial year.
With the recent law revision, these funds, once directed into the state treasury, are now fully allocated to Danantara.
Euben Paracuelles, senior economist at Nomura, warned that the reallocation of dividends could pose fiscal risks, as SOE dividends have long been seen as a vital revenue source for the government.
“However, since the law has only recently been signed and the implementing rules and regulations are still being finalised, we are excluding its impact on the full year 2025 Budget for the time being,” he explained.
Ari Jahja, head of Indonesia research at Macquarie Capital, stated that the transformation of SOEs through Danantara is a crucial step in optimising dividend management, and supporting Indonesia’s goal of achieving 8 per cent gross domestic product growth in the medium term.
“Increased investments will be key to reaching this target,” he said.
New head
Although not yet officially confirmed by the president, local media reports indicate that Rosan Roeslani, the current investment minister and head of the Investment Coordinating Board, is set to succeed Muliaman Hadad as the new leader of Danantara.
Hasan Nasbi, the presidential communication officer, said that Rosan will lead Danantara, joined by Pandu Sjahrir, vice-president director of TBS Energi Utama and a prominent technology and mining investor, as well as Dony Oskaria, the deputy minister of SOEs.
Rosan is a seasoned entrepreneur who co-founded Recapital Group in 1997, growing it into a diversified powerhouse with interests spanning asset management, insurance, securities and beyond.
His business ventures extend into finance, mining, healthcare, property and media, cementing his reputation as a key player across multiple sectors.
In 2023, he took on the role of deputy minister of SOEs in then president Joko Widodo’s administration. Prior to this, he served as Indonesia’s ambassador to the US from 2021 to 2023.
In the political arena, Rosan also served as the head of the campaign team for Prabowo’s 2024 presidential election victory.
Governance concern
Yet, amid the optimism championed by the government, the creation of Danantara has sparked controversy.
A recently amended law reveals that Danantara will now report directly to Prabowo, granting him expanded control over the entities under its management.
There are growing concerns over the independence and professionalism of the institution’s leadership, as well as the vast power granted to Danantara without sufficient mechanisms for checks and balances.
With the appointment of figures with strong political and business backgrounds, concerns have emerged that Danantara may end up serving the interests of certain elites rather than fulfilling its mandate as a transparent and accountable national investment manager.
Achmad Nur Hidayat, a public policy analyst from UPN Veteran Jakarta, pointed to the shocking 1MDB scandal as an example of how political dominance over an institution can undermine the rule of law.
“The same concerns apply to Danantara. If this institution is more influenced by political interests than by strict regulations, similar scandals could occur,” he warned.
