Indonesia is preparing to launch an ambitious new sovereign wealth fund, Daya Anagata Nusantara (Danantara), with a sweeping mandate to invest in a variety of industries as part of President Prabowo Subianto’s strategy to boost the nation’s economic growth to 8% annually.
In an address to the World Governments Summit, Prabowo announced that Danantara will begin operations this month, aiming for an impressive $900 billion in assets under management. While he did not provide a specific timeline for reaching this scale, he emphasized that the fund could eventually rival some of the world’s largest sovereign wealth funds, such as Singapore’s GIC Pte.
The fund’s focus will include renewable energy, advanced manufacturing, food production, and other downstream industries, all of which are seen as key to Indonesia’s economic future. “The fund, which will launch on February 24, will invest our natural resources and state assets into sustainable, high-impact projects across sectors,” Prabowo stated. “These projects will help us achieve our target of 8% economic growth.”
Danantara will begin with an initial investment fund of $20 billion in 2025. The president indicated that the fund plans to initiate between 15 to 20 multi-billion-dollar projects this year, aiming to significantly add value to the economy. “I’m very confident. I’m very bullish,” he said.
While details on the specific structure of the fund remain unclear, Prabowo highlighted that the fund will focus on fostering local industries and reducing Indonesia’s dependence on raw commodity exports. This effort is part of a broader plan to attract foreign investment while bolstering the nation’s industrial base.
The fund’s creation follows a parliamentary amendment to the state-owned enterprises law, which enables Danantara to manage state-owned companies, including their investments and dividends. Initial funding could come from a combination of state assets, cash, and government-owned shares, totaling an estimated 1,000 trillion rupiah (roughly $60 billion).
Indonesia’s government holds significant stakes in major companies, such as PT Bank Mandiri and PT Telkom Indonesia, though it is yet to be confirmed whether these holdings will be transferred into Danantara.
Despite the lack of concrete details on its governance and investment strategy, Danantara is expected to report directly to President Prabowo and be overseen by a supervisory board. The fund will be led by Muliaman Hadad, a former deputy governor of Bank Indonesia, with a regulatory framework expected to be finalized soon to clarify its operations.
However, questions remain about the fund’s long-term strategy, its ability to ensure both profitable returns and proper governance, and how it will manage state assets effectively. Currently, the Indonesia Investment Authority, a similar entity, manages less than $10 billion in assets, underscoring the ambitious nature of Danantara’s projected scale.
In comparison, other global sovereign wealth funds like GIC Pte. and Norges Bank Investment Management, which have accumulated substantial assets over decades, serve as benchmarks for Danantara’s potential trajectory. While GIC is estimated to manage around $800 billion in assets, Norges Bank oversees assets valued at approximately $1.8 trillion across diverse investment sectors.
As Indonesia embarks on this bold economic initiative, the nation is poised to see significant developments in its efforts to reshape its economy and investments in the years to come.
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