Indonesia has launched its second sovereign wealth fund, Danantara, marking a significant milestone in the nation's economic strategy. Under the leadership of President Prabowo Subianto, Danantara aims to manage the assets of all state-owned enterprises in Indonesia, valued at over US$900 billion. The government is investing US$20 billion from the state budget into Danantara's first wave of strategic projects. These projects will focus on sectors such as nickel, bauxite, copper, food production, renewable energy, artificial intelligence, oil refineries, and petrochemical plants.
Danantara is Indonesia's latest move toward its goal of becoming a developed country. The fund is expected to invest in 20 or more high-impact national projects this year. The establishment of Danantara follows the recent amendment of a law regarding state-owned enterprises on February 4. This legislative change facilitated the creation of the fund, which will be headed by Investment and Downstreaming Minister Rosan Roeslani. State-owned Enterprises Minister Erick Thohir will serve as the chairman of the fund's supervisory board.
The government's strategic budget cuts have enabled it to save approximately US$44 billion, with US$20 billion allocated specifically for Danantara. This financial maneuvering reflects Indonesia's commitment to improving the efficiency of its state-owned enterprises. As of 2023, Indonesia had 65 state-owned enterprises but plans to reduce this number to just 30 companies.
President Prabowo Subianto expressed enthusiasm about the fund's potential impact on the global stage.
“Today, all Indonesians can be proud because, with a total asset of more than US$900 billion under management, Danantara Indonesia will be one of the world's largest sovereign wealth funds.” – Prabowo
The launch event for Danantara was attended by former Indonesian presidents Megawati, Joko Widodo, and Susilo Bambang Yudhoyono, highlighting the bipartisan support for this economic initiative. The fund aims to attract international cooperation and investment, as emphasized by President Prabowo.
“Indonesia sends a clear message to all friends and partners worldwide (that) Indonesia is open for collaboration, open for business, open for investment, and open to shared prosperity,” – Prabowo
The transparency and governance of Danantara have been subjects of scrutiny. Concerns about the fund's auditing processes have been raised by experts, prompting discussions about potential involvement from the BPK (Indonesian Public Accounting Agency) and the KPK (Corruption Eradication Commission). Minister Rosan Roeslani addressed these concerns directly.
“There is no immunity from the law in this country.” – Rosan Roeslani
“So the KPK (Corruption Eradication Commission) can (audit), especially if there are improper or criminal actions, it is very, very possible,” – Rosan Roeslani
While Danantara seeks to expand Indonesia's economic reach and stability, some experts have expressed reservations about its approach. Esther Sri Astuti suggested that improving existing state-owned enterprises should be a priority before establishing such a comprehensive holding structure.
“Those state-owned enterprises should be improved first, then a super holding can be created,” – Esther Sri Astuti
Bhima Yudhistira echoed similar sentiments by advocating for enhancements to the Indonesia Investment Authority (INA) and the state-owned enterprises themselves.
“They should just improve INA and all the state-owned enterprises,” – Bhima Yudhistira
Despite these concerns, President Prabowo remains confident in Danantara's role in shaping Indonesia's future.
“These are the sectors that will determine our future, our resilience and our nation's independence,” – Prabowo
Danantara's establishment represents a strategic move to consolidate Indonesia's assets and leverage them for national development. The fund is poised to enhance international partnerships and foster economic growth within the region.
“Danantara Indonesia will allow us to expand our international cooperation, and I hope that all global partners will recognise Indonesia’s potential not just as an emerging economy but also as a pillar of regional stability and shared progress.” – Prabowo
The financial discipline exercised in launching this initiative is seen as a testament to Indonesia's commitment to responsible governance.
“We have already proven our commitment to managing Indonesia’s wealth and assets with very careful financial discipline and responsible governance in our first 100 days.” – Prabowo
However, the distribution of dividends from Danantara remains a point of discussion. According to industry analyst Toto Pranoto, the dividends paid to the state could vary based on Danantara's policy decisions and business expansion needs.
“It depends on the policy agreed upon between Danantara and the government (as well as) the Ministry of Finance. This means that if Danantara needs most of the profit for business expansion, the dividends given to the state would also automatically be small,” – Toto Pranoto
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