[JAKARTA] Indonesia 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 catalysing investment and fuelling the nation’s ambitious growth trajectory.
For a start, Danantara will allocate US$20 billion to fund 20 high-impact national projects.
The funds will be allocated to key sectors such as downstream nickel, bauxite, copper, artificial intelligence, oil refineries, petrochemical plants, food production, aquaculture and renewable energy – programmes central to President Prabowo Subianto’s ambitious goal of achieving 8 per cent economic growth.
At the launch event, Prabowo signed a document at the presidential palace in Jakarta to inaugurate the fund.
He highlighted that the creation of Danantara, a portmanteau of Daya Anagata Nusantara – meaning “the future power of the archipelago” – marks a historic step for the country towards achieving 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 its counterpart funds in Saudi Arabia and Singapore.
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The fund, which draws inspiration from Singapore investment company Temasek Holdings, is poised to play a central role in Indonesia’s economic strategy.
Prabowo emphasised that 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.
He did not, however, go into details about the projects that will receive the billions of dollars in investments.
“Through this initiative, we will establish strategic partnerships in renewable energy, infrastructure and 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 1,000 trillion rupiah (S$82 billion), were drawn from the 2023 financial year.
With the recent revision of the law, 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 was only recently 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 said.
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
Investment Minister Rosan Roeslani, who also heads the Investment Coordinating Board, is set to replace Muliaman Hadad as the new leader of Danantara.
Rosan will be 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.
In a separate press briefing, Rosan said he is committed to ensuring the transparency and strong governance of the fund, building investor confidence and encouraging greater capital flows into Indonesia.
He also spoke on the potential for joint ventures with foreign partners: “We are open to collaboration. We’re not just asking them to invest in our country; we’re inviting them to co-invest with us.”
The minister is himself 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 was deputy minister of SOEs in then president Joko Widodo’s administration. It was a role he took on after having been Indonesia’s ambassador to the US from 2021 to 2023.
In the political arena, Rosan headed Prabowo’s 2024 presidential election campaign.
Governance concern
Amid the government’s optimism over the promise of Danantara, the fund has not been without controversy.
A law that was recently amended provides for Danantara to now report directly to Prabowo, which gives the president 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 the fund 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, cited Malaysia’s 1MDB scandal as an example of how political dominance over an institution undermined 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.
