Indonesia’s parliament has approved the creation of a new sovereign investment fund aimed at overseeing key state-owned enterprises (SOEs) and generating capital for domestic and international investments. The newly established entity, the Daya Anagata Nusantara Investment Management Agency, or Danantara, will take over all government holdings in SOEs from the State-Owned Enterprises Ministry.
Announced shortly after the newly elected Indonesian president took office in October, Danantara will launch with an initial capital of at least IDR 1,000 trillion (approximately USD 61 billion), based on the estimated consolidated capital of Indonesia’s SOEs, which stood at IDR 1,135 trillion (around USD 73.6 billion) in 2023, according to Reuters.
As Bloomberg reported ahead of the parliamentary vote, the bill grants Danantara authority over state assets, enabling it to approve capital increases, restructure companies through mergers, acquisitions, and spin-offs, and establish new investment holdings in consultation with parliament. The fund will have the flexibility to make both direct and indirect investments while collaborating with SOEs and third-party investors.
Danantara’s core portfolio will consist of seven major SOEs, including the state electricity provider Perusahaan Listrik Negara, energy giant Pertamina, mining firm PT Mineral Industri Indonesia, telecom operator Telkom Indonesia, and three state-owned banks—Bank Mandiri, Bank Rakyat Indonesia, and Bank Negara Indonesia, according to Jakarta Globe.
Indonesian officials have stated that Danantara is modeled after Singapore’s Temasek Holdings, which has successfully invested the city-state’s foreign exchange reserves globally since its establishment in 1974. As of March 2024, Temasek managed a portfolio valued at SGD 389 billion (USD 287.5 billion), according to its website.
Reuters further reported that Danantara will operate through two entities: one responsible for managing SOEs under the supervision of the SOE Ministry and another serving as an investment firm to oversee dividends and leverage assets.
This marks Indonesia’s second sovereign wealth fund following the creation of the Indonesia Investment Authority (INA) in 2021. While INA currently manages around USD 10.5 billion in state assets, the establishment of Danantara is intended to support President Prabowo’s ambitious economic agenda, which aims for an annual growth rate of 8% throughout his five-year term. By the end of this period, Danantara aims to expand its managed assets to USD 982 billion, positioning it as the world’s fourth-largest sovereign wealth fund.
(Source: The Diplomat)
