On Monday, Indonesia’s new sovereign wealth fund, Danantara, introduced its strategic team to guide its operations, featuring former presidents and advisory contributions from notable figures like hedge fund manager Ray Dalio, economist Jeffrey Sachs, and Thailand’s former prime minister, Thaksin Shinawatra.
Danantara is poised to play a crucial role in President Prabowo Subianto’s ambition to achieve 8% economic growth by 2029. The fund aims to manage shares of state-owned enterprises and reinvest the dividends into commercial projects.
Envisioned as a counterpart to Singapore’s Temasek, Danantara is expected to oversee more than $900 billion in assets, making this one of the world’s largest sovereign funds. Danantara is the largest sovereign fund in the country and Indonesia’s second sovereign wealth fund after the Indonesia Investment Authority and will operate separately.
Former Indonesian Presidents Joko Widodo and Susilo Bambang Yudhoyono have joined its steering committee. Moreover, Ray Dalio, founder of Bridgewater, and Thaksin Shinawatra, the former PM of Thailand, will both serve as advisors.
As per a Reuters report, Jeffrey Sachs was the only individual among those listed who confirmed to the news agency via email his position as President Prabowo’s special adviser and a member of Danantara’s advisory board. He emphasized his voluntary involvement in supporting Indonesia’s development.
Danantara plans to invest $20 billion from an initial capital of $61 billion in sectors like natural resources processing, AI development, and energy and food security. This sovereign wealth fund, operating under the direct oversight of the president, signifies a pivotal move in the nation’s economic strategy.
The governance structure of Danantara comprises three critical bodies. The Supervisory Board, led by the Minister of SOEs, is tasked with ensuring compliance. Meanwhile, the Managing Board handles day-to-day operations and investment activities, and the Advisory Board contributes strategic insight.
Danantara’s investment strategy is focused on optimizing SOE performance and enticing global investors through direct and third-party investments. It plans restructuring initiatives such as mergers and acquisitions to bolster financial sustainability. Furthermore, Danantara intends to manage strategic assets by channeling SOE dividends into high-growth sectors like renewable energy and technology, fostering long-term economic growth.
In its initial operational phase, Danantara is set to manage seven key state-owned enterprises. These include three state-owned banks, two energy companies, one mining company, and one telecommunications company, namely:
- Bank Rakyat Indonesia (BRI) – one of Indonesia’s largest banks, focused on microfinance and micro, small, and Medium-sized enterprises (MSMEs);
- Bank Negara Indonesia (BNI) – a state-owned commercial bank;
- Bank Mandiri – Indonesia’s largest bank;
- Pertamina – a state-owned oil and gas company;
- Mineral Industri Indonesia (MIND ID) – a fully state-owned mining company with a foothold in the aluminum, gold, coal, bauxite, nickel ore, and copper industries, among others;
- Perusahaan Listrik Negara (PT PLN) – a state-owned electricity company;
- Telkom Indonesia – a state-owned telecommunications conglomerate;
In the official statement last month, President Prabowo Subianto disclosed that “the launching of Danantara Indonesia today marks an important milestone because Danantara Indonesia is not a mere investment management board. It must become a national development instrument that will optimize our way of managing Indonesia’s wealth.”
Meanwhile, the fund’s creation has stirred concerns about state control over the economy, contributing to last week’s stock market decline in Indonesia, with the main index dropping up to 7%, leading to a temporary suspension of trading.
