President Prabowo Subianto (centre) greeting former president Joko “Jokowi“ Widodo during the launch of Danantara in Jakarta on Feb. 24, 2025. - AFP
JAKARTA: President Prabowo Subianto launched Danantara, the nation’s newest sovereign wealth fund, with US$20 billion in initial capital on Monday (Feb 24), but analysts have warned that the fund will face challenges in winning investor trust given its governance structure.
Danantara is a superholding set to consolidate all state-owned enterprises (SOEs) and is envisioned as a national investment management firm akin to Singapore’s Temasek.
Prabowo appointed Investment and Downstream Minister Rosan Roeslani as the fund’s CEO, marking a reversal from the President’s earlier decision to appoint former OJK head Muliaman Hadad to the position in October of last year.
Rosan is joined by Deputy SOEs Minister Doni Oskaria as chief operating officer and Pandu Sjahrir, an entrepreneur and nephew of former senior minister Luhut Pandjaitan, as chief investment officer.
The firm, which is to manage $900 billion in assets, will report directly to the president while operating under a supervisory board led by SOEs Minister Erick Thohir, with Muliaman now serving as his deputy.
The House of Representatives passed a bill on Feb 4 to amend the existing SOEs Law, laying the legal groundwork for Danantara’s formation after a series political compromises ended a tug-of-war among key stakeholders that had delayed Danantara’s progress since the initially planned launch in November of last year.
The new version of the law moves almost all government stakes in SOEs from the SOEs Ministry to Danantara and protects the agency’s executive from being persecuted for losses incurred through investment decisions provided they were made in good faith, raising concerns about potential corruption and moral hazard.
Experts warn the country has long history of mismanagement within its SOEs and have expressed concern that Danantara could turn out like Malaysia’s 1MDB fund, which was embroiled in a massive corruption scandal.
Rosan said the Corruption Eradication Commission (KPK) and the Supreme Audit Agency (BPK) still had the power to scrutinise the agency. The fund will focus on investing in strategic sectors, including in the downstream nickel, bauxite and copper industries, as well as artificial intelligence (AI) data centres, oil refineries, petrochemicals, food production, aquaculture and renewable energy.
“In our first 100 days, my administration secured over $20 billion in savings that were previously [lost through] inefficiencies, corruption and misallocation but will now be channelled into more than 20 national strategic projects, creating real long-term benefits for our people,” Prabowo said during the launch.
The President said additional funds would be injected from SOE dividends each year.
Minister Rosan said the fund would attract foreign investors by offering them the opportunity to invest in national projects with Danantara as a co-investor to “have skin in the game”. He added that the Indonesia Investment Authority (INA), the country’s existing sovereign wealth fund, would remain a separate entity, for now, despite initial plans to have it absorbed by Danantara.
Meanwhile, Danantara’s investment head Pandu said the fund was open to opportunities in both private and public markets.
“Our investments should also serve as an engine for economic growth by creating meaningful job opportunities,” Pandu said during the launch on Monday.
Building investor trust Andry Satrio Nugroho, head of the centre for industry, trade and investment at the Institute for Development of Economics and Finance (Indef), warned that Danantara would face significant hurdles in building investor trust, given that its top executives were either ministers or political figures.
“The supervisory and operational functions of Danantara risk becoming biased, especially with key roles such as the COO and the head of the supervisory board coming from the same ministry,” Andry said during an online event on Monday.
“As long as political figures continue to dominate these positions, there will be political intervention in the asset management.”
He urged the government to end the dual roles held by Danantara’s executives and called for the firm’s investment and financial reports to be made publicly accessible.
Ronny P. Sasmita, an economist at the Indonesia Strategic and Economic Action Institution (ISEAI), echoed concerns that appointing ministers and government-affiliated individuals to Danantara’s leadership blurred the line between SOE regulators and operators.
“There’s a significant risk that Danantara could clear the path for its own investments by shaping regulations that favor itself while sidelining private players in the process,” Ronny told The Jakarta Post on Monday.
“This undermines a level playing field and could dampen investment appetite across the sector.” President Prabowo acknowledged that there were many questions and doubts about Danantara’s potential for success, saying, “It is to be expected.”
Rosan dismissed concerns that his dual role as investment minister could compromise Danantara’s independence, arguing that the agency’s mandate naturally aligned with the investment sector.
“So [the Investment Ministry] will not only focus on setting the investment road map and handling licensing but will also accelerate [investment] through our fund,” he said, without revealing any plans to leave his role.
The SOEs Ministry said on Monday that it had yet to decide on Doni’s dual role, while Pandu said he was ready to resign from his enterprises upon joining Danantara. - The Jakarta Post/ANN
