Indonesia Launches Danantara, a $900 Billion Sovereign Wealth Fund

Indonesia has launched a new sovereign wealth fund, Danantara, to oversee state-owned assets valued at over $900 billion. Announced on Feb 24, the fund—officially named Daya Anagata Nusantara—will serve as both an investment vehicle and a holding company for state-owned enterprises (SOEs). President Prabowo Subianto aims to use Danantara to accelerate economic growth, with plans to invest in at least 20 major national projects this year.

The initiative is part of Prabowo’s broader strategy to increase Indonesia’s annual growth rate from five to eight percent during his first term. To support this goal, his administration has introduced significant budget cuts, which triggered public protests last week. Meanwhile, officials have addressed financial transparency and oversight concerns, assuring that the fund will be closely monitored.

The government saved approximately $44 billion through these spending reductions, with $20 billion allocated to Danantara’s initial investments. Critics argue that these cuts have affected essential sectors, prompting some policy reversals, such as reinstating funds for scholarships and contract workers.

Prabowo has positioned Danantara as a key instrument for Indonesia’s economic expansion. The first wave of investments targets strategic industries such as nickel, bauxite, copper, food production, renewable energy, artificial intelligence, oil refineries, and petrochemicals. He emphasized that these sectors are crucial for strengthening Indonesia’s resilience and economic independence. The fund, modeled after Singapore’s Temasek, aims to optimize state-owned assets while attracting foreign investment and fostering global collaboration.

Danantara will oversee selected state-owned enterprises (SOEs), including major banks—Bank Mandiri, Bank Rakyat Indonesia, and Bank Negara Indonesia—along with state electricity provider PLN, oil and gas giant Pertamina, Telkom Indonesia, and Mining Industry Indonesia. With nearly $900 billion in assets under management, it is set to become one of the world’s largest sovereign wealth funds, surpassing Saudi Arabia’s Public Investment Fund and Singapore’s GIC. More SOEs may be added in the future to strengthen its portfolio further.

Danantara is Indonesia’s second sovereign wealth fund, operating separately from the Indonesia Investment Authority. Beyond consolidating SOEs, it aims to attract investment and drive economic transformation. The government hopes that by channeling funds into high-impact projects, the fund will accelerate growth and position Indonesia as a global economic powerhouse. However, analysts caution that successful implementation will be key to ensuring long-term benefits and avoiding inefficiencies seen in past state-led initiatives.

The government has also introduced legal protections for Danantara’s executives, shielding them from personal liability for financial losses if decisions are made in good faith. This measure aims to foster business confidence and prevent the criminalization of investment risks, an issue that has previously deterred state-owned firms from pursuing ambitious ventures. Despite these assurances, critics remain skeptical, with social media users questioning whether the government, already struggling with bureaucracy and corruption, can effectively manage such a large-scale investment initiative.